17 December 2008
23 November 2008
Kirstie and Phil's Location, Location, Location Returns as UK House Prices Crash Housing-Market / UK Housing Nov 20, 2008 - 01:12 AM
By: Nadeem_Walayat
Kirstie and Phil self professed property experts make a return to the UK's TV screens with a more muted version of their long standing delusionally bullish UK property candy floss show titled location, location, location that helped feed the get on the property ladder frenzy of the last few years.
Finally, Kirstie has been forced to recognise the fact that house prices can actually fall which follows earlier near religiously opinionated programming that fed on and reinforced the fervour that gripped much of the country as annual house prices roared ahead every month by more than that which people earned in wages, that house prices are a one way bet.
The credit crash is clearly leaving the presenters in an air of frustration that the wood be buyers are in increasing numbers failing to act on their suggestions of buying found properties as people increasingly realise the risks of buying into a crashing UK housing market. Kirstie is still not getting the message that no matter how much you want house prices to rise, you can't talk up the market. But still the impression is that the presenters desperately want the potential buyers to BUY the located properties upon which the programme still hinges, when most are not wanting to once they do the sums away from the glare of the TV cameras, that BUYING does NOT stack up as the analysis of November 2007 showed and concluded that house prices need to rise by more than 2% per annum to beat renting, anything else and buyers lose money.
housepricecrash.co.uk video
Whilst Kirstie's now infamous emotional and angry response against anyone that suggested that house prices could fall on ITV's London Tonight 'appears' to have gone. Still both Kirstie and Phil are attempting to talk people into lemming like house buying decisions that they will likely regret as the housing bear market progresses, as in fact the most recent program illustrates which showed that had prospective buyers acted on Kirstie's and Phil's 'suggestion to buy', they would have lost £20k ! Let alone many of those that acted during the programming's boom years that are now probably sitting in negative equity.
Perhaps Channel 4 should have commissioned a show titled Repossession, Repossession, Repossession, so as to revisit those of Kirstie and Phil's clients that are in the process of handing their keys back as they pack their possessions and head off to some rundown council estate. Instead Channel 4 is holding onto an old programming formula that has been tinkered to at the edges for primarily an era that has now GONE ! No longer exists, instead of focusing on the housing bear market.
The return of the property show location,location, location follows Channel 4's other new money series titled the Ascent of Money, unfortunately again Channel 4 have commissioned a series led by an academic called Niall Ferguson, who appears to have little real world experience of actually trading the financial markets but purports to know the answers that led up to the credit collapse and what is likely to transpire. This from someone who apparently stated in late 1999 and early 2000 that Gold was dead as an investment and held no future other than as jewellery, and in fact published a book to the the same effect in 2001 as this was his conclusion after 'studying' over 500 years of monetary history.
It just goes to show the wide difference between academia that basically does not understand what they are talking about as they have never actually gained the experience and insight that comes with actually trading the markets over a number of years by reacting to price movements in real time. Instead academics rely on sanitised historic events without any of the associated experience of actually being immersed in events in real-time which is from which accurate forecasts are generated, rather grandiose theories of what should happen are employed that usually never stand up to a real market environment.
Given the poor quality of mainstream programming, its no wonder than people are waking up to find out that their banks are bankrupt and the housing market has crashed.
As to where house prices are going ?
The most recent house price data released by the Halifax shows that UK house prices have fallen by more than 16% from the peak of August 2007 and October 2008. The crash in both US and UK housing markets over the last 12 months was increasingly followed in September by the bankrupt banks collapsing one by one like a chain of dominos with governments rushing to their rescue during September and early October to the tune of unheard of amounts of tax payers money that now runs to collectively over $3 trillion. This triggered the near panic co-ordinated interest rate cuts in October of 0.5%, which was followed this month by an near unprecedented 1.5% cut.
The whole trend for the house price crash has been forecast well in advance of events, right from the very peak to the initial down-trend path amidst prevailing mainstream denial that house prices were actually falling as recent as of March of this year, and right up to the most recent data that fulfills the original forecast of a 15% fall in average UK house prices as projected in August 2007.
The current house price forecast is now complete, therefore work is underway towards completing in-depth analysis geared towards generating the next accurate forecast for UK house prices to cover the next 2 to 3 years, to get the analysis in your inbox subscribe to our always free newsletter.
By Nadeem Walayathttp://www.marketoracle.co.uk
By: Nadeem_Walayat
Kirstie and Phil self professed property experts make a return to the UK's TV screens with a more muted version of their long standing delusionally bullish UK property candy floss show titled location, location, location that helped feed the get on the property ladder frenzy of the last few years.
Finally, Kirstie has been forced to recognise the fact that house prices can actually fall which follows earlier near religiously opinionated programming that fed on and reinforced the fervour that gripped much of the country as annual house prices roared ahead every month by more than that which people earned in wages, that house prices are a one way bet.
The credit crash is clearly leaving the presenters in an air of frustration that the wood be buyers are in increasing numbers failing to act on their suggestions of buying found properties as people increasingly realise the risks of buying into a crashing UK housing market. Kirstie is still not getting the message that no matter how much you want house prices to rise, you can't talk up the market. But still the impression is that the presenters desperately want the potential buyers to BUY the located properties upon which the programme still hinges, when most are not wanting to once they do the sums away from the glare of the TV cameras, that BUYING does NOT stack up as the analysis of November 2007 showed and concluded that house prices need to rise by more than 2% per annum to beat renting, anything else and buyers lose money.
housepricecrash.co.uk video
Whilst Kirstie's now infamous emotional and angry response against anyone that suggested that house prices could fall on ITV's London Tonight 'appears' to have gone. Still both Kirstie and Phil are attempting to talk people into lemming like house buying decisions that they will likely regret as the housing bear market progresses, as in fact the most recent program illustrates which showed that had prospective buyers acted on Kirstie's and Phil's 'suggestion to buy', they would have lost £20k ! Let alone many of those that acted during the programming's boom years that are now probably sitting in negative equity.
Perhaps Channel 4 should have commissioned a show titled Repossession, Repossession, Repossession, so as to revisit those of Kirstie and Phil's clients that are in the process of handing their keys back as they pack their possessions and head off to some rundown council estate. Instead Channel 4 is holding onto an old programming formula that has been tinkered to at the edges for primarily an era that has now GONE ! No longer exists, instead of focusing on the housing bear market.
The return of the property show location,location, location follows Channel 4's other new money series titled the Ascent of Money, unfortunately again Channel 4 have commissioned a series led by an academic called Niall Ferguson, who appears to have little real world experience of actually trading the financial markets but purports to know the answers that led up to the credit collapse and what is likely to transpire. This from someone who apparently stated in late 1999 and early 2000 that Gold was dead as an investment and held no future other than as jewellery, and in fact published a book to the the same effect in 2001 as this was his conclusion after 'studying' over 500 years of monetary history.
It just goes to show the wide difference between academia that basically does not understand what they are talking about as they have never actually gained the experience and insight that comes with actually trading the markets over a number of years by reacting to price movements in real time. Instead academics rely on sanitised historic events without any of the associated experience of actually being immersed in events in real-time which is from which accurate forecasts are generated, rather grandiose theories of what should happen are employed that usually never stand up to a real market environment.
Given the poor quality of mainstream programming, its no wonder than people are waking up to find out that their banks are bankrupt and the housing market has crashed.
As to where house prices are going ?
The most recent house price data released by the Halifax shows that UK house prices have fallen by more than 16% from the peak of August 2007 and October 2008. The crash in both US and UK housing markets over the last 12 months was increasingly followed in September by the bankrupt banks collapsing one by one like a chain of dominos with governments rushing to their rescue during September and early October to the tune of unheard of amounts of tax payers money that now runs to collectively over $3 trillion. This triggered the near panic co-ordinated interest rate cuts in October of 0.5%, which was followed this month by an near unprecedented 1.5% cut.
The whole trend for the house price crash has been forecast well in advance of events, right from the very peak to the initial down-trend path amidst prevailing mainstream denial that house prices were actually falling as recent as of March of this year, and right up to the most recent data that fulfills the original forecast of a 15% fall in average UK house prices as projected in August 2007.
The current house price forecast is now complete, therefore work is underway towards completing in-depth analysis geared towards generating the next accurate forecast for UK house prices to cover the next 2 to 3 years, to get the analysis in your inbox subscribe to our always free newsletter.
By Nadeem Walayathttp://www.marketoracle.co.uk
Cameron draws up battle lines.....
News Review interview: David Cameron
Unfazed by his falling poll lead, the Tory leader is turning tough, dour and aggressive to challenge an increasingly cavalier Gordon Brown
Dominic Lawson
David Cameron prides himself on treating Kipling’s two impostors, triumph and disaster, just the same. So in the week when the Conservative lead in the opinion polls has crumbled to three points and the entire business establishment has seemed to line up behind Gordon Brown’s plans to borrow still more to reflate the economy, the Tory leader appears as relaxed and self-confident as ever. But with all the political turbulence, is he still relishing the job and managing at the same time to enjoy family life?
“Yes, these are turbulent times and there are huge challenges facing the Conservative party, but I feel more confident than ever that I have found a good team and I’m happy in the job. And I do feel I still spend enough time with the family. Last night I got home at seven and read Noddy for the millionth time to Elwyn and put the children to bed and then Sam and I had supper together and just watched televi-sion. That doesn’t happen every night, admittedly.”
Immediately outside the tight-knit family unit, one of Cameron’s closest friends is George Osborne, the shadow chancellor. Notwithstanding Cameron’s remarks about his “good team”, how worried is he about the loud murmurings within the Tory party that (partly as a result of ill-advised talks about party donations on a Russian oligarch’s yacht) Osborne should make way for a political heavyweight with government experience, such as Ken Clarke?
“It doesn’t worry me too much.
You have these times in politics when you go through the wringer; but the fact is that George is a tough, confident and robust person and he’s got good judgment and he will come through this.”
I point out that Cameron and Osborne are each godparents to one of the other’s children. In such circumstances is it possible for him to be as objective as he needs to be as a boss?
“Funnily enough, I’d almost say the opposite in a way. That makes me sound rather cold and heartless – you know, I had to sack a friend from the shadow cabinet [fellow Old Etonian Hugo Swire] and I did. I mean, I hope I’m a kind and gentle and friendly and compassionate person but I’m also very tough. And George is also able to look at the situation objectively, knowing that he’s been through a tough time and he’s got to come through it.”
The Batman and Robin of the modern Conservative party are now united in a politically high-risk strategy to oppose outright the fiscal stimulus – otherwise known as hand-outs – that Alistair Darling, the chancellor, is set to announce to parliament tomorrow. Hold on a second, though: wasn’t Cameron only the other day saying that the Conservative party would try to forge a “bipartisan consensus” on the economy in such dire national circumstances?
“Look at exactly what I said. When I gave the speech at our party conference about all-party support, it clearly applied to the immediate banking crisis, the need to rescue the banks. It did not mean that we backed the fact that the government are borrowing so much. It did not mean that we backed their broader economic policy. But Gordon Brown, he’s a very cunning politician. What he always does with any offer of support about anything is to say, ‘Ah, well, if you support this thing over here, you support everything I do.’ It’s a tactic he has.”
I suggest to the Tory leader that his strictures about Brown’s fiscally irresponsible behaviour would sound more convincing if he had not earlier committed his party to matching Labour’s spending plans through to 2010 – plans that he now argues are partly responsible for the nation’s overborrowed state.
“I switched policy because they had become unaffordable. We can have an argument about whether they became unaffordable earlier and whether we should have moved earlier. But the Conservative party is doing what an opposition party ought to be doing, which is to warn of the huge cost of what the government seems determined to embark upon.
“We’re talking about a public borrowing requirement of maybe £70 billion this year and over £100 billion next year. And the question is: what are the risks of going ahead? I’ve been very careful not to say – considering such hideous consequences there could be as a result, for sterling, long-term interest rates and the ability to fund the debt – not to say that these things will happen, but that these things might happen.”
However, Brown’s point, backed by serried ranks of economists, is that the greater risk to the economy lies in not borrowing more money to avert a slump, isn’t it? “He says the risk of inaction is worse than the risk of action but he doesn’t even want to admit to the affordability problem because the reason why it is so potentially unaffordable is because he’s put us there.”
There is a sense in which Brown is successfully painting himself as the FDR fighting to get the world out of a slump, with Cameron as a pale imitation of the do-nothing approach of the US Republican party in the 1930s, isn’t there?
“I just think that’s wrong. We are being extraordinarily active in terms of ideas to combat unemployment and rising repossessions, helping small businesses’ cash flow, making sure that money flows from the banks into businesses.
“Of course the prime minister will try to paint one of his famous dividing lines because he sits in Downing Street endlessly scheming up dividing lines. The real dividing line is that I’m telling the truth about the bad state of the public finances and he’s taking everyone for fools. That’s a dividing line I’m happy to debate between now and the next election.”
Ah, the next election. Many prime ministers before Brown have run the economic cycle to fit the political cycle: that is, they have cut taxes in the year or two leading up to a general election without worrying too much about how to pay the bill afterwards, just so long as it wins them another term in office. Does Cameron think that is what is going on now?
“I think he has the sense . . . he knows he has a huge share of the responsibility for the mess we’re already in. He knows it’s going to get worse and I think he knows the longer this goes on, the more he’s going to get found out. I think that’s why the kitchen sink is being dispatched with such haste. He must know this, having given us lectures about prudence for so many years, having said so many times that you can’t spend your way out of a recession, having said so many times that unfunded tax cuts are irresponsible. He must know the frustration of talking to other world leaders, who’ve got surpluses and can afford to do what we can’t, which is to distribute those surpluses.”
Cameron used to work in the Treasury as a special adviser to Norman Lamont, then the chancellor. Does his experience there lead him to believe that Darling and his officials are nervous about the borrowing that Brown seems determined to increase still further?
“Oh yes, it’s Gordon at the controls with his foot hard on the accelerator and I think Alistair Darling and the Treasury are desperately worried that this could impair the finances for years to come and we’ll be paying increased taxes for years and years as a result. You can almost hear the concern in the Treasury. In fact you can read it in the papers.”
Yet, I say, some MPs are now saying this could be Labour’s Falklands war – a crisis that was in large part caused by British government policy errors, but that was the making of a prime minister and led to election victory. Cameron lets out a shudder of distaste at the analogy.
“The key thing for me is: why are we where we are? There are two arguments being made: one by the Conservatives, which is that there were international causes but that we made some profound mistakes in Britain and Gordon Brown is responsible for that. It wasn’t America that made us the most indebted country on earth or said we should remove the Bank of England from its role of regulating debt in the economy.
“Gordon Brown’s argument that this all comes from America, like the movie The Monster that Came from the Deep, it’s nothing to do with me: this is a ludicrous argument and this will be understood by people.”
If it’s so obvious that Brown is “being found out”, why are the opinion polls moving in inverse relation to this apparent fact?
“I think at this stage of a crisis, governments can benefit. A foreign prime minister said to me the other day that while it’s all about trying to take coordinated measures with other world leaders, that looks good for governments. But then after that . . .”
Isn’t it equally possible that Cameron and his colleagues simply underestimated Brown? This provokes the only occasion in the interview when Cameron raises his voice sharply.
“Never! I was asked this question when he was 10 points ahead in the polls, I was asked this question when I was 28 points ahead. I never underestimate my opponents. I don’t think anyone can legitimately claim, in any way, that I’ve taken my foot off the gas for one day in the three years I’ve been doing the job.”
I hadn’t, in fact, accused Cameron of a lack of vigour. Indeed it seems to me that his weekly hectoring of Brown at prime minister’s questions has become increasingly strident and aggressive: how does this square with his claim that on becoming Tory leader he would end “Punch and Judy politics”?
“The idea that there’s a nonconfrontational, more chummy way of doing PMQs, it’s just not the case. I thought it might be possible. I was wrong. I thought maybe it could be different, and actually it can’t be. The fact is, prime minister’s questions is an adversarial occasion. It’s about me asking quite tough questions on behalf of the public. It’s the questions they want answered. And you can’t pull your punches.” Doesn’t Cameron accept, all the same, that the spectacle of him and Brown almost shouting at each other at PMQs over the fate of Baby P was perhaps the best illustration of how this approach alienates the public by producing more heat than light?
“I thought I was asking in a nonpartisan, nonaggressive way a perfectly reasonable question – the reasonableness of which was demonstrated when, four hours later, the government took up my suggestion of an independent inquiry. And I thought that the prime minister’s charge that I was playing party politics over Baby P was completely wrong and appalling and I thought he should withdraw it.”
Which he hasn’t? “He hasn’t. He doesn’t do that sort of thing.”
Vastly different people though Brown and Cameron are, they are both keen students of history. I wonder if Cameron feels that he is in a similar position, albeit in opposition, to Margaret Thatcher and Geoffrey Howe in 1981, when 364 economists wrote a letter urging them to stimulate the economy. Thatcher and Howe, unbending, insisted that their overwhelming priority was to reduce Britain’s debts.
“I do study history carefully, but it never repeats itself exactly: there was a much bigger problem with inflation then. I have spoken to Geoffrey recently: he was desperately trying to be fiscally prudent in order to get interest rates down and they kept creeping back up again because the fiscal situation was so bad. My thinking is perhaps more straightforward: I am a fiscal conservative. I believe profoundly in cutting taxes and would like to do it as prime minister. I don’t believe in unfunded tax cuts, just hoping the money’s going to come back.”
So the battle lines are drawn for the next election: adventurous, tax-cutting, risk-taking Gordon Brown versus Mr Prudence himself, dour David Cameron. Who would have believed it?
Unfazed by his falling poll lead, the Tory leader is turning tough, dour and aggressive to challenge an increasingly cavalier Gordon Brown
Dominic Lawson
David Cameron prides himself on treating Kipling’s two impostors, triumph and disaster, just the same. So in the week when the Conservative lead in the opinion polls has crumbled to three points and the entire business establishment has seemed to line up behind Gordon Brown’s plans to borrow still more to reflate the economy, the Tory leader appears as relaxed and self-confident as ever. But with all the political turbulence, is he still relishing the job and managing at the same time to enjoy family life?
“Yes, these are turbulent times and there are huge challenges facing the Conservative party, but I feel more confident than ever that I have found a good team and I’m happy in the job. And I do feel I still spend enough time with the family. Last night I got home at seven and read Noddy for the millionth time to Elwyn and put the children to bed and then Sam and I had supper together and just watched televi-sion. That doesn’t happen every night, admittedly.”
Immediately outside the tight-knit family unit, one of Cameron’s closest friends is George Osborne, the shadow chancellor. Notwithstanding Cameron’s remarks about his “good team”, how worried is he about the loud murmurings within the Tory party that (partly as a result of ill-advised talks about party donations on a Russian oligarch’s yacht) Osborne should make way for a political heavyweight with government experience, such as Ken Clarke?
“It doesn’t worry me too much.
You have these times in politics when you go through the wringer; but the fact is that George is a tough, confident and robust person and he’s got good judgment and he will come through this.”
I point out that Cameron and Osborne are each godparents to one of the other’s children. In such circumstances is it possible for him to be as objective as he needs to be as a boss?
“Funnily enough, I’d almost say the opposite in a way. That makes me sound rather cold and heartless – you know, I had to sack a friend from the shadow cabinet [fellow Old Etonian Hugo Swire] and I did. I mean, I hope I’m a kind and gentle and friendly and compassionate person but I’m also very tough. And George is also able to look at the situation objectively, knowing that he’s been through a tough time and he’s got to come through it.”
The Batman and Robin of the modern Conservative party are now united in a politically high-risk strategy to oppose outright the fiscal stimulus – otherwise known as hand-outs – that Alistair Darling, the chancellor, is set to announce to parliament tomorrow. Hold on a second, though: wasn’t Cameron only the other day saying that the Conservative party would try to forge a “bipartisan consensus” on the economy in such dire national circumstances?
“Look at exactly what I said. When I gave the speech at our party conference about all-party support, it clearly applied to the immediate banking crisis, the need to rescue the banks. It did not mean that we backed the fact that the government are borrowing so much. It did not mean that we backed their broader economic policy. But Gordon Brown, he’s a very cunning politician. What he always does with any offer of support about anything is to say, ‘Ah, well, if you support this thing over here, you support everything I do.’ It’s a tactic he has.”
I suggest to the Tory leader that his strictures about Brown’s fiscally irresponsible behaviour would sound more convincing if he had not earlier committed his party to matching Labour’s spending plans through to 2010 – plans that he now argues are partly responsible for the nation’s overborrowed state.
“I switched policy because they had become unaffordable. We can have an argument about whether they became unaffordable earlier and whether we should have moved earlier. But the Conservative party is doing what an opposition party ought to be doing, which is to warn of the huge cost of what the government seems determined to embark upon.
“We’re talking about a public borrowing requirement of maybe £70 billion this year and over £100 billion next year. And the question is: what are the risks of going ahead? I’ve been very careful not to say – considering such hideous consequences there could be as a result, for sterling, long-term interest rates and the ability to fund the debt – not to say that these things will happen, but that these things might happen.”
However, Brown’s point, backed by serried ranks of economists, is that the greater risk to the economy lies in not borrowing more money to avert a slump, isn’t it? “He says the risk of inaction is worse than the risk of action but he doesn’t even want to admit to the affordability problem because the reason why it is so potentially unaffordable is because he’s put us there.”
There is a sense in which Brown is successfully painting himself as the FDR fighting to get the world out of a slump, with Cameron as a pale imitation of the do-nothing approach of the US Republican party in the 1930s, isn’t there?
“I just think that’s wrong. We are being extraordinarily active in terms of ideas to combat unemployment and rising repossessions, helping small businesses’ cash flow, making sure that money flows from the banks into businesses.
“Of course the prime minister will try to paint one of his famous dividing lines because he sits in Downing Street endlessly scheming up dividing lines. The real dividing line is that I’m telling the truth about the bad state of the public finances and he’s taking everyone for fools. That’s a dividing line I’m happy to debate between now and the next election.”
Ah, the next election. Many prime ministers before Brown have run the economic cycle to fit the political cycle: that is, they have cut taxes in the year or two leading up to a general election without worrying too much about how to pay the bill afterwards, just so long as it wins them another term in office. Does Cameron think that is what is going on now?
“I think he has the sense . . . he knows he has a huge share of the responsibility for the mess we’re already in. He knows it’s going to get worse and I think he knows the longer this goes on, the more he’s going to get found out. I think that’s why the kitchen sink is being dispatched with such haste. He must know this, having given us lectures about prudence for so many years, having said so many times that you can’t spend your way out of a recession, having said so many times that unfunded tax cuts are irresponsible. He must know the frustration of talking to other world leaders, who’ve got surpluses and can afford to do what we can’t, which is to distribute those surpluses.”
Cameron used to work in the Treasury as a special adviser to Norman Lamont, then the chancellor. Does his experience there lead him to believe that Darling and his officials are nervous about the borrowing that Brown seems determined to increase still further?
“Oh yes, it’s Gordon at the controls with his foot hard on the accelerator and I think Alistair Darling and the Treasury are desperately worried that this could impair the finances for years to come and we’ll be paying increased taxes for years and years as a result. You can almost hear the concern in the Treasury. In fact you can read it in the papers.”
Yet, I say, some MPs are now saying this could be Labour’s Falklands war – a crisis that was in large part caused by British government policy errors, but that was the making of a prime minister and led to election victory. Cameron lets out a shudder of distaste at the analogy.
“The key thing for me is: why are we where we are? There are two arguments being made: one by the Conservatives, which is that there were international causes but that we made some profound mistakes in Britain and Gordon Brown is responsible for that. It wasn’t America that made us the most indebted country on earth or said we should remove the Bank of England from its role of regulating debt in the economy.
“Gordon Brown’s argument that this all comes from America, like the movie The Monster that Came from the Deep, it’s nothing to do with me: this is a ludicrous argument and this will be understood by people.”
If it’s so obvious that Brown is “being found out”, why are the opinion polls moving in inverse relation to this apparent fact?
“I think at this stage of a crisis, governments can benefit. A foreign prime minister said to me the other day that while it’s all about trying to take coordinated measures with other world leaders, that looks good for governments. But then after that . . .”
Isn’t it equally possible that Cameron and his colleagues simply underestimated Brown? This provokes the only occasion in the interview when Cameron raises his voice sharply.
“Never! I was asked this question when he was 10 points ahead in the polls, I was asked this question when I was 28 points ahead. I never underestimate my opponents. I don’t think anyone can legitimately claim, in any way, that I’ve taken my foot off the gas for one day in the three years I’ve been doing the job.”
I hadn’t, in fact, accused Cameron of a lack of vigour. Indeed it seems to me that his weekly hectoring of Brown at prime minister’s questions has become increasingly strident and aggressive: how does this square with his claim that on becoming Tory leader he would end “Punch and Judy politics”?
“The idea that there’s a nonconfrontational, more chummy way of doing PMQs, it’s just not the case. I thought it might be possible. I was wrong. I thought maybe it could be different, and actually it can’t be. The fact is, prime minister’s questions is an adversarial occasion. It’s about me asking quite tough questions on behalf of the public. It’s the questions they want answered. And you can’t pull your punches.” Doesn’t Cameron accept, all the same, that the spectacle of him and Brown almost shouting at each other at PMQs over the fate of Baby P was perhaps the best illustration of how this approach alienates the public by producing more heat than light?
“I thought I was asking in a nonpartisan, nonaggressive way a perfectly reasonable question – the reasonableness of which was demonstrated when, four hours later, the government took up my suggestion of an independent inquiry. And I thought that the prime minister’s charge that I was playing party politics over Baby P was completely wrong and appalling and I thought he should withdraw it.”
Which he hasn’t? “He hasn’t. He doesn’t do that sort of thing.”
Vastly different people though Brown and Cameron are, they are both keen students of history. I wonder if Cameron feels that he is in a similar position, albeit in opposition, to Margaret Thatcher and Geoffrey Howe in 1981, when 364 economists wrote a letter urging them to stimulate the economy. Thatcher and Howe, unbending, insisted that their overwhelming priority was to reduce Britain’s debts.
“I do study history carefully, but it never repeats itself exactly: there was a much bigger problem with inflation then. I have spoken to Geoffrey recently: he was desperately trying to be fiscally prudent in order to get interest rates down and they kept creeping back up again because the fiscal situation was so bad. My thinking is perhaps more straightforward: I am a fiscal conservative. I believe profoundly in cutting taxes and would like to do it as prime minister. I don’t believe in unfunded tax cuts, just hoping the money’s going to come back.”
So the battle lines are drawn for the next election: adventurous, tax-cutting, risk-taking Gordon Brown versus Mr Prudence himself, dour David Cameron. Who would have believed it?
16 November 2008
House Crash ~ How much further to go?
Five experts predict how much further house prices will fall
UK house prices are now nearly 15 per cent lower than 12 months ago, according to the Nationwide, with the price of an average house dropping by £30,000 to £158,872.
But when will the house price crash end and how far will prices fall? Should buyers grab a bargain now, or wait another year, or even longer. Times Money asked five experts for their predictions on when the market will hit rock bottom. Here are their answers. And have your say in our poll below.
Martin Ellis – chief economist, Halifax
Prediction: Another 8% fall
“We are predicting a 20 per cent fall over 2008 and 2009 – so as we calculate that prices have already fallen by 12.4 per cent, we would expect roughly another 8 per cent fall before prices start to bottom out at the end of 2009.
“There’s a lot of uncertainty surrounding the economy and unemployment figures in particular at the moment, so it’s very hard to say when prices will start to recover. Prices certainly won’t bounce back quickly.”
Jonathan Davis – housepricecrash.co.uk
Prediction: Another 35% fall
“The market will not bottom out until spring 2011, by which point there will be a 40 to 50 per cent drop from when house prices were at their peak in August last year.
“If you remember the last house price crash in 1988, it took until 1994 for the market to recover, so a good four or five years. There is no reason whatsoever to suppose the market will recover any quicker this time.
“It is far too early to bag a bargain – people should not be buying for at least another two years. We are only one year into the crash, and it has a long way to go yet.”
Yolande Barnes – Savills
Prediction: Another 10% fall
“We are forecasting a 25 per cent drop from when house prices were at their peak last year, so that means we’ve got about another 10 per cent to go. Whilst we expect prices to bottom out during 2010, the prospect of recession means we do not expect prices to start recovering anytime soon. Houses will not regain their 2007 value until about 2014, or possibly 2013 in the south-east.”
Nicholas Leeming – propertyfinder.com
Prediction: Another 10% fall
“There will be a further drop of about 10 per cent throughout 2009, before the market starts to level out at the end of the year. It will take a while for the effects of the Government bail-out to filter through – the capital markets will not be freed up until maybe the third quarter of 2009, when we can expect to see more mortgage transactions and a gradual recovery of the market.”
Nick Bate, UK economist, Merrill Lynch
Prediction: Another 10% fall
“There will be a 25 per cent drop from the market peak last summer – we have already seen about a 15 per cent drop, so we have about another 10 per cent to go.
“However, no one can say with any confidence exactly where prices will be in a year’s time – but it will certainly be a long time before prices recover to the levels we saw last year. With unemployment rising and people becoming less credit worthy, banks may continue to be reluctant to lend for some time, and this will lead to a very muted recovery.”
UK house prices are now nearly 15 per cent lower than 12 months ago, according to the Nationwide, with the price of an average house dropping by £30,000 to £158,872.
But when will the house price crash end and how far will prices fall? Should buyers grab a bargain now, or wait another year, or even longer. Times Money asked five experts for their predictions on when the market will hit rock bottom. Here are their answers. And have your say in our poll below.
Martin Ellis – chief economist, Halifax
Prediction: Another 8% fall
“We are predicting a 20 per cent fall over 2008 and 2009 – so as we calculate that prices have already fallen by 12.4 per cent, we would expect roughly another 8 per cent fall before prices start to bottom out at the end of 2009.
“There’s a lot of uncertainty surrounding the economy and unemployment figures in particular at the moment, so it’s very hard to say when prices will start to recover. Prices certainly won’t bounce back quickly.”
Jonathan Davis – housepricecrash.co.uk
Prediction: Another 35% fall
“The market will not bottom out until spring 2011, by which point there will be a 40 to 50 per cent drop from when house prices were at their peak in August last year.
“If you remember the last house price crash in 1988, it took until 1994 for the market to recover, so a good four or five years. There is no reason whatsoever to suppose the market will recover any quicker this time.
“It is far too early to bag a bargain – people should not be buying for at least another two years. We are only one year into the crash, and it has a long way to go yet.”
Yolande Barnes – Savills
Prediction: Another 10% fall
“We are forecasting a 25 per cent drop from when house prices were at their peak last year, so that means we’ve got about another 10 per cent to go. Whilst we expect prices to bottom out during 2010, the prospect of recession means we do not expect prices to start recovering anytime soon. Houses will not regain their 2007 value until about 2014, or possibly 2013 in the south-east.”
Nicholas Leeming – propertyfinder.com
Prediction: Another 10% fall
“There will be a further drop of about 10 per cent throughout 2009, before the market starts to level out at the end of the year. It will take a while for the effects of the Government bail-out to filter through – the capital markets will not be freed up until maybe the third quarter of 2009, when we can expect to see more mortgage transactions and a gradual recovery of the market.”
Nick Bate, UK economist, Merrill Lynch
Prediction: Another 10% fall
“There will be a 25 per cent drop from the market peak last summer – we have already seen about a 15 per cent drop, so we have about another 10 per cent to go.
“However, no one can say with any confidence exactly where prices will be in a year’s time – but it will certainly be a long time before prices recover to the levels we saw last year. With unemployment rising and people becoming less credit worthy, banks may continue to be reluctant to lend for some time, and this will lead to a very muted recovery.”
Nick Louth predicts on housing
More house price falls to come
By Nick Louth, exclusive to MSN
November 13 2008
The big rise in unemployment this week and the Bank of England's admission that Britain is in recession are clear reminders that those hoping for a quick end to falling house prices are likely to be disappointed.
Whether we look at other housing booms in the UK, experience in other countries, or the relationship between the economy and house prices, evidence suggest we are still a considerable way from the bottom.
The UK economy in depth
Recession for real"It is very likely that the economy entered a recession in the second half (of 2008)," Bank governor Mervyn King said. He said that the economy could shrink by 2% next year, compared with the broadly flat forecast the bank had previously. Earlier, a 140,000 rise in the jobless total in September put unemployment at 1.82 million, the highest in 11 years.
Those who lose their jobs are of course under immediate pressure on mortgage payments, but those who merely fear their jobs are under threat are more likely to act more cautiously too. That means fewer new buyers, delays in transactions and a temptation for sellers to lower asking prices.
Why the recession is needed immediately
Average prices drop, more to comeAverage UK house prices peaked at just under £200,000 in August 2007, according to the Halifax. Prices in October, at £168,000 were 16% down from this, matching levels last seen three years ago.
Nationwide, the largest building society in the country, reckons prices will fall by 25% in total, and there may be no bounce-back before 2010, according to chief executive Graham Beale
Based on the Halifax index, that would put average prices down to £150,000. However, it could easily be a lot worse because of the size of the bubble that preceded the August 2007 peak and the severity of the current economic downturn.
Bubbles past and presentThe last slide in UK house prices was a rather modest affair, though it lasted six years from May 1989 to July 1995. House prices as measured by the Halifax fell by 13%, from an average of £70,000 to £61,000 over the period. That might be a comforting precedent, except that it is already clear that the UK has in one year experienced a house price fall which took six years to occur in the 1990s. And it is still getting worse.
The difference this time is that we have had a major banking crisis which has rationed credit, while a recession is building which looks to be in a different league to the modest economic slowdown of the early 1990s.
Research by professor Morgan Kelly of University College Dublin shows that house price bubble across the world have similar characteristics. On average prices lose 70% of the gains made from trough to peak before bottoming out. This research is backed up by an international study made by the Bank of International Settlements in 2004, which found a strong positive correlation between the size of a housing bubble and the subsequent fall.
The doomsday scenario?So if Professor Kelly's 70% figure is accurate, where would that leave UK house prices? The last downturn in the housing market ended in July 1995, when average prices according to the Halifax were £61,000. That gain, trough to peak over 12 years, is £139,000. So if this is a typical bubble, the fall would be 70% of that, £97,000, taking the price of the average house at the low to just £103,000.
There are plenty who would see this as too much of a doomsday scenario, especially as houses would become affordable long before such low prices were reached. House prices have averaged 4.0 times average earnings over the long term, and since prices peaked the ratio has already dropped from 5.84 to 4.92 in August.
"Housing affordability is improving significantly," said Martin Ellis, chief economist at the Halifax. "The house price to average earnings ratio has fallen below 5.0 for the first time for four and a half years. We expect a further improvement in the ratio over the coming months."
Affordability issueIf average earnings do not change, which is itself a hefty assumption given the recession we are entering, prices would hit the long-term affordability average with a further 20% fall.
The trouble with this argument is that once houses became an investment asset, with the buy-to-let boom of the late 1990s, they became subject to the same speculative forces that drive share prices.
Instead of being guided by "fundamentals" such as the ratio of income to price, they were driven by price expectations. What that implies is that we can expect an overshoot, in which prices having been way above typical affordability averages for several years, then spend some time well below them.
Mortgage troubles drag onOne additional difficulty this time around is in mortgage finance. Though the Bank of England has cut interest rates sharply, stubbornly high inter-bank rates mean that rates offered to borrowers have yet to fall significantly. With buyers having to stump up larger deposits too, and credit generally harder to come by, this augurs badly for those who expect prices to soon stabilise.
Weakening activity underlines this. The Royal Institution of Chartered Surveyors said its sale-to-stock ratio, which measures transactions as a proportion of homes offered for sales, fell in October to the lowest level since December 1992. This seems to reflect a mis-match between the asking prices of sellers, and what buyers are willing or able to spend.
Some commentators, however, see the gloomy headlines as far too alarmist. One is Stuart Law, chief executive of property investment specialist Assetz.
"Our view is that house prices will drop by around a total of 10 to 15% from the peak this time last year, based on the Financial Times house price index data," he said. "We therefore think that prices will fall no further than a further 5% or 10% at most."
The FT Index, which uses the actual mix of property in England and Wales, rather than the mix based on sales, has recorded only a 4.3% fall in the year to September, less than half that recorded by most other indices.
Law noted that the complexities of the housing market produce some temporary pricing effects. "Auction pricing and distressed house builders are selling for much greater discounts than is visible within the house price indices," he said. "Even today we are sourcing property from house builders at greater than 30% discount to current valuation, never-mind from peak value last year."
The good news for most...The one piece of good news is that for most people, most of the time, house prices don't matter. You need a home to live in, and higher or lower prices are reflected both in the home you sell and the one you purchase. For first-time buyers, where they have job security, falling prices remain good news to be taken advantage of.
However, for those who have purchased recently, over-stretched buy-to-let investors, those who are having trouble making mortgage payments and those who have lost their jobs, price falls mean trouble. The fear of negative equity - in which the value of the home sinks below the size of the mortgage - ensures a cash loss if the home has to be sold.
The more prices fall in the months and years to come, the more people are going to be facing that anxiety.
By Nick Louth, exclusive to MSN
November 13 2008
The big rise in unemployment this week and the Bank of England's admission that Britain is in recession are clear reminders that those hoping for a quick end to falling house prices are likely to be disappointed.
Whether we look at other housing booms in the UK, experience in other countries, or the relationship between the economy and house prices, evidence suggest we are still a considerable way from the bottom.
The UK economy in depth
Recession for real"It is very likely that the economy entered a recession in the second half (of 2008)," Bank governor Mervyn King said. He said that the economy could shrink by 2% next year, compared with the broadly flat forecast the bank had previously. Earlier, a 140,000 rise in the jobless total in September put unemployment at 1.82 million, the highest in 11 years.
Those who lose their jobs are of course under immediate pressure on mortgage payments, but those who merely fear their jobs are under threat are more likely to act more cautiously too. That means fewer new buyers, delays in transactions and a temptation for sellers to lower asking prices.
Why the recession is needed immediately
Average prices drop, more to comeAverage UK house prices peaked at just under £200,000 in August 2007, according to the Halifax. Prices in October, at £168,000 were 16% down from this, matching levels last seen three years ago.
Nationwide, the largest building society in the country, reckons prices will fall by 25% in total, and there may be no bounce-back before 2010, according to chief executive Graham Beale
Based on the Halifax index, that would put average prices down to £150,000. However, it could easily be a lot worse because of the size of the bubble that preceded the August 2007 peak and the severity of the current economic downturn.
Bubbles past and presentThe last slide in UK house prices was a rather modest affair, though it lasted six years from May 1989 to July 1995. House prices as measured by the Halifax fell by 13%, from an average of £70,000 to £61,000 over the period. That might be a comforting precedent, except that it is already clear that the UK has in one year experienced a house price fall which took six years to occur in the 1990s. And it is still getting worse.
The difference this time is that we have had a major banking crisis which has rationed credit, while a recession is building which looks to be in a different league to the modest economic slowdown of the early 1990s.
Research by professor Morgan Kelly of University College Dublin shows that house price bubble across the world have similar characteristics. On average prices lose 70% of the gains made from trough to peak before bottoming out. This research is backed up by an international study made by the Bank of International Settlements in 2004, which found a strong positive correlation between the size of a housing bubble and the subsequent fall.
The doomsday scenario?So if Professor Kelly's 70% figure is accurate, where would that leave UK house prices? The last downturn in the housing market ended in July 1995, when average prices according to the Halifax were £61,000. That gain, trough to peak over 12 years, is £139,000. So if this is a typical bubble, the fall would be 70% of that, £97,000, taking the price of the average house at the low to just £103,000.
There are plenty who would see this as too much of a doomsday scenario, especially as houses would become affordable long before such low prices were reached. House prices have averaged 4.0 times average earnings over the long term, and since prices peaked the ratio has already dropped from 5.84 to 4.92 in August.
"Housing affordability is improving significantly," said Martin Ellis, chief economist at the Halifax. "The house price to average earnings ratio has fallen below 5.0 for the first time for four and a half years. We expect a further improvement in the ratio over the coming months."
Affordability issueIf average earnings do not change, which is itself a hefty assumption given the recession we are entering, prices would hit the long-term affordability average with a further 20% fall.
The trouble with this argument is that once houses became an investment asset, with the buy-to-let boom of the late 1990s, they became subject to the same speculative forces that drive share prices.
Instead of being guided by "fundamentals" such as the ratio of income to price, they were driven by price expectations. What that implies is that we can expect an overshoot, in which prices having been way above typical affordability averages for several years, then spend some time well below them.
Mortgage troubles drag onOne additional difficulty this time around is in mortgage finance. Though the Bank of England has cut interest rates sharply, stubbornly high inter-bank rates mean that rates offered to borrowers have yet to fall significantly. With buyers having to stump up larger deposits too, and credit generally harder to come by, this augurs badly for those who expect prices to soon stabilise.
Weakening activity underlines this. The Royal Institution of Chartered Surveyors said its sale-to-stock ratio, which measures transactions as a proportion of homes offered for sales, fell in October to the lowest level since December 1992. This seems to reflect a mis-match between the asking prices of sellers, and what buyers are willing or able to spend.
Some commentators, however, see the gloomy headlines as far too alarmist. One is Stuart Law, chief executive of property investment specialist Assetz.
"Our view is that house prices will drop by around a total of 10 to 15% from the peak this time last year, based on the Financial Times house price index data," he said. "We therefore think that prices will fall no further than a further 5% or 10% at most."
The FT Index, which uses the actual mix of property in England and Wales, rather than the mix based on sales, has recorded only a 4.3% fall in the year to September, less than half that recorded by most other indices.
Law noted that the complexities of the housing market produce some temporary pricing effects. "Auction pricing and distressed house builders are selling for much greater discounts than is visible within the house price indices," he said. "Even today we are sourcing property from house builders at greater than 30% discount to current valuation, never-mind from peak value last year."
The good news for most...The one piece of good news is that for most people, most of the time, house prices don't matter. You need a home to live in, and higher or lower prices are reflected both in the home you sell and the one you purchase. For first-time buyers, where they have job security, falling prices remain good news to be taken advantage of.
However, for those who have purchased recently, over-stretched buy-to-let investors, those who are having trouble making mortgage payments and those who have lost their jobs, price falls mean trouble. The fear of negative equity - in which the value of the home sinks below the size of the mortgage - ensures a cash loss if the home has to be sold.
The more prices fall in the months and years to come, the more people are going to be facing that anxiety.
06 October 2008
02 October 2008
House price crash source
Not sure if this is a repost. I don't really care either. Just enjoy the fall.
http://news.bbc.co.uk/1/hi/business/7647251.stm
http://news.bbc.co.uk/1/hi/business/7647251.stm
Any mortgages out there?
Why even mortgage brokers are struggling to find mortgages for their clients...
A massive two-thirds of brokers have been unable to source a mortgage for clients in the past two months, according to the Intermediary Mortgage Lenders Association. This surprising statistic highlights just how difficult it is to secure mortgage finance for many borrowers, with even the experts struggling to find us a deal.
The main reasons brokers quoted for the inability to find their clients mortgages are the tightening of lending criteria and the increase in deposits required, as loan-to-values (LTVs) have been cut – a problem mentioned by 51% of respondents. After that, 23% of intermediaries cited the withdrawal of products as the biggest impediment.
And this survey was released last week, before the B&B crisis and before hundreds more products were pulled from the market on Monday, wiping out 11% of available mortgages according to some estimates.
So the situation has just got a whole lot worse!
Problem areas
Brokers said that they are having problems finding deals across all product types with remortgages mentioned by 72% of respondents. Over half claimed they had been unable to source a loan for a first-time buyer and 50% couldn’t help a sub-prime borrower to find a deal.
Perhaps most worrying is that over a quarter (26%) of intermediaries had struggled to find deals for standard status borrowers -- the average Joes who are perceived to be least affected by the credit crunch.
What happens to these borrowers?
If brokers are unable to help a borrower get a deal, what can they do?
Well, they could try going direct to lenders to see if there are any products available that brokers cannot access. Earlier this year, many lenders introduced what was called a ‘dual pricing policy’ making their direct-to-consumer deals cheaper than those offered through brokers. This clearly made life extremely difficult for good brokers, who were forced to tell their clients they could get a better deal by going direct to the banks and building societies.
But dual pricing has become less of an issue in recent months and it’s fair to say that brokers now have access to most (if not all) of the competitive products on the market (HSBC being one significant exception). While deals may sometimes look different in terms of headline rates, broker deals sometimes come with added extras, like free valuation and legal fees for example, that might offset a difference somewhere else in the product.
The bad news is that the IMLA survey showed that customers who were unable to obtain a mortgage mostly ended up remaining with their existing lender on their Standard Variable Rate as a result. This is likely to be around 1.5% to 2% higher than the most competitive deals on the market. A massive 83% of brokers admitted that borrowers they couldn’t help fell into this category. This means that when they come to the end of a deal, such as a two-year fixed rate, they are being forced to move onto a much higher rate, and in most cases will pay significantly more each month.
For first-time buyers, a large proportion (40%) continued to rent instead of buying if their broker couldn’t find them a deal. Interestingly, a small percentage of existing homeowners who couldn’t get a decent remortgage deal decided to sell up and rent (15%), according to the brokers surveyed.
And sadly, they admitted that in 14% of cases where they could not help, the customer is facing repossession.
How can you avoid this?
Is there anything you can do to prevent yourself being one of the borrowers that brokers, or indeed lenders, cannot help to find a decently priced mortgage?
Well, it’s easier said than done. There are ways you can ensure you can have access to the best deals, but they may not be easy to achieve. Here are three key considerations:
Borrow less.
We would all like to have a whopping 40% deposit but it’s not that easy, is it? However the best and most competitive mortgages are available to those who only need to borrow 60% of the property’s value. However, there are plenty of extremely good deals for those who have 25% to put down. It gets tougher to find a deal the smaller your deposit so it really is essential that you try to save as much as possible. If you have a deposit of 5% for example you will have a pretty small selection of expensive mortgage to choose from. The good news is that with house prices falling, first-time buyers may be able to continue saving for longer, rather than feeling pressured to rush into the property market right now.
Clean up your credit record.
Lenders love whiter than white borrowers with no history of bad credit. This has always been the case and they have always charged ‘sub-prime’ borrowers more to offset the lending risk. Now they simply won’t lend to people with anything other than the minimum of credit problems. If you do have outstanding late payments on any credit agreements, settle them before you even apply for a mortgage. Although remember that lenders can still see past payment discrepancies on your credit file.
Become Mr and Mrs Average.
Unusual requirements are not what lenders want at the moment. Although there are self-cert mortgages out there for those who can’t prove their income, for example, they are expensive and the cheapest deals are available to those in full-time employment, on the electoral roll where they live, and preferably having lived in the same property for a while. Credit scoring often penalises those who move house, and jobs, frequently.
More: Buy-to-let Gets Busted
A massive two-thirds of brokers have been unable to source a mortgage for clients in the past two months, according to the Intermediary Mortgage Lenders Association. This surprising statistic highlights just how difficult it is to secure mortgage finance for many borrowers, with even the experts struggling to find us a deal.
The main reasons brokers quoted for the inability to find their clients mortgages are the tightening of lending criteria and the increase in deposits required, as loan-to-values (LTVs) have been cut – a problem mentioned by 51% of respondents. After that, 23% of intermediaries cited the withdrawal of products as the biggest impediment.
And this survey was released last week, before the B&B crisis and before hundreds more products were pulled from the market on Monday, wiping out 11% of available mortgages according to some estimates.
So the situation has just got a whole lot worse!
Problem areas
Brokers said that they are having problems finding deals across all product types with remortgages mentioned by 72% of respondents. Over half claimed they had been unable to source a loan for a first-time buyer and 50% couldn’t help a sub-prime borrower to find a deal.
Perhaps most worrying is that over a quarter (26%) of intermediaries had struggled to find deals for standard status borrowers -- the average Joes who are perceived to be least affected by the credit crunch.
What happens to these borrowers?
If brokers are unable to help a borrower get a deal, what can they do?
Well, they could try going direct to lenders to see if there are any products available that brokers cannot access. Earlier this year, many lenders introduced what was called a ‘dual pricing policy’ making their direct-to-consumer deals cheaper than those offered through brokers. This clearly made life extremely difficult for good brokers, who were forced to tell their clients they could get a better deal by going direct to the banks and building societies.
But dual pricing has become less of an issue in recent months and it’s fair to say that brokers now have access to most (if not all) of the competitive products on the market (HSBC being one significant exception). While deals may sometimes look different in terms of headline rates, broker deals sometimes come with added extras, like free valuation and legal fees for example, that might offset a difference somewhere else in the product.
The bad news is that the IMLA survey showed that customers who were unable to obtain a mortgage mostly ended up remaining with their existing lender on their Standard Variable Rate as a result. This is likely to be around 1.5% to 2% higher than the most competitive deals on the market. A massive 83% of brokers admitted that borrowers they couldn’t help fell into this category. This means that when they come to the end of a deal, such as a two-year fixed rate, they are being forced to move onto a much higher rate, and in most cases will pay significantly more each month.
For first-time buyers, a large proportion (40%) continued to rent instead of buying if their broker couldn’t find them a deal. Interestingly, a small percentage of existing homeowners who couldn’t get a decent remortgage deal decided to sell up and rent (15%), according to the brokers surveyed.
And sadly, they admitted that in 14% of cases where they could not help, the customer is facing repossession.
How can you avoid this?
Is there anything you can do to prevent yourself being one of the borrowers that brokers, or indeed lenders, cannot help to find a decently priced mortgage?
Well, it’s easier said than done. There are ways you can ensure you can have access to the best deals, but they may not be easy to achieve. Here are three key considerations:
Borrow less.
We would all like to have a whopping 40% deposit but it’s not that easy, is it? However the best and most competitive mortgages are available to those who only need to borrow 60% of the property’s value. However, there are plenty of extremely good deals for those who have 25% to put down. It gets tougher to find a deal the smaller your deposit so it really is essential that you try to save as much as possible. If you have a deposit of 5% for example you will have a pretty small selection of expensive mortgage to choose from. The good news is that with house prices falling, first-time buyers may be able to continue saving for longer, rather than feeling pressured to rush into the property market right now.
Clean up your credit record.
Lenders love whiter than white borrowers with no history of bad credit. This has always been the case and they have always charged ‘sub-prime’ borrowers more to offset the lending risk. Now they simply won’t lend to people with anything other than the minimum of credit problems. If you do have outstanding late payments on any credit agreements, settle them before you even apply for a mortgage. Although remember that lenders can still see past payment discrepancies on your credit file.
Become Mr and Mrs Average.
Unusual requirements are not what lenders want at the moment. Although there are self-cert mortgages out there for those who can’t prove their income, for example, they are expensive and the cheapest deals are available to those in full-time employment, on the electoral roll where they live, and preferably having lived in the same property for a while. Credit scoring often penalises those who move house, and jobs, frequently.
More: Buy-to-let Gets Busted
Biggest since I don't know when.....
House price fall biggest in 17 years
By Christina Fincher
LONDON (Reuters) - House prices fell 1.7 percent in the month of September to post their biggest annual drop since comparable records began in 1991, the Nationwide building society said on Thursday.
Interest rate futures rallied as investors speculated the figures increased the chance of an interest rate cut by the Bank of England next week, although analysts cautioned that a cut in itself would do little to halt sliding property values.
"Even if the Bank of England cuts interest rates as early as next week, as we now expect, this is likely to provide only very limited support to the housing market given that elevated money market rates are exerting upward pressure on fixed rate mortgages," said Howard Archer, economist at Global Insight.
Mortgage approvals are already less than a third what they were a year ago and figures from the Bank of England Thursday showed lenders expect to restrict credit even further in the coming months.
A survey of construction, meanwhile, showed the sector contracted for a seventh consecutive month in September as commercial activity fell at the fastest pace since the survey began a decade ago.
Nationwide said house prices in September were 12.4 percent lower than a year earlier. Before 1991, Nationwide conducted quarterly house price surveys. The largest annual fall on that measure was a 10.7 percent drop recorded in the early 1990s.
The 11th consecutive monthly decline highlights the sharp reversal of fortune for the property market since the credit crunch took hold last summer, bringing an end to a decade in which property values almost trebled.
"Casting back one year there have been some astonishing and unpredictable developments in the housing and financial markets," said Fionnuala Earley, Nationwide's chief economist.
"We would need to see a significant shift in consumers' sentiment before we begin to see any real recovery in activity and subsequently house prices."
September's decline pushed the average price of a property to 161,797 pounds, the lowest since February 2006.
The precipitous drop in house prices both in Britain and overseas has been a key element of the crisis that is rocking the global banking sector and threatening to send many industrialised economies into recession.
A reluctance by banks to lend to each other had led to a sharp increase in wholesale funding costs in recent weeks. Several mortgage providers have responded by raising their own mortgage rates.
Policymakers are concerned a weakening property market could feed a vicious downward spiral of falling consumer demand and rising unemployment.
Futures markets suggest the Bank of England will cut interest rates to 4.75 percent next week and to 4 percent by this time next year.
A Reuters poll this week showed 45 of 66 economists polled September 29-October 1 said the BoE would hold rates at 5.0 percent next week. A cut by the end of the year is now almost a certainty with forecasters in the poll.
(Reporting by Christina Fincher; Editing by Mike Peacock/Toby Chopra)
By Christina Fincher
LONDON (Reuters) - House prices fell 1.7 percent in the month of September to post their biggest annual drop since comparable records began in 1991, the Nationwide building society said on Thursday.
Interest rate futures rallied as investors speculated the figures increased the chance of an interest rate cut by the Bank of England next week, although analysts cautioned that a cut in itself would do little to halt sliding property values.
"Even if the Bank of England cuts interest rates as early as next week, as we now expect, this is likely to provide only very limited support to the housing market given that elevated money market rates are exerting upward pressure on fixed rate mortgages," said Howard Archer, economist at Global Insight.
Mortgage approvals are already less than a third what they were a year ago and figures from the Bank of England Thursday showed lenders expect to restrict credit even further in the coming months.
A survey of construction, meanwhile, showed the sector contracted for a seventh consecutive month in September as commercial activity fell at the fastest pace since the survey began a decade ago.
Nationwide said house prices in September were 12.4 percent lower than a year earlier. Before 1991, Nationwide conducted quarterly house price surveys. The largest annual fall on that measure was a 10.7 percent drop recorded in the early 1990s.
The 11th consecutive monthly decline highlights the sharp reversal of fortune for the property market since the credit crunch took hold last summer, bringing an end to a decade in which property values almost trebled.
"Casting back one year there have been some astonishing and unpredictable developments in the housing and financial markets," said Fionnuala Earley, Nationwide's chief economist.
"We would need to see a significant shift in consumers' sentiment before we begin to see any real recovery in activity and subsequently house prices."
September's decline pushed the average price of a property to 161,797 pounds, the lowest since February 2006.
The precipitous drop in house prices both in Britain and overseas has been a key element of the crisis that is rocking the global banking sector and threatening to send many industrialised economies into recession.
A reluctance by banks to lend to each other had led to a sharp increase in wholesale funding costs in recent weeks. Several mortgage providers have responded by raising their own mortgage rates.
Policymakers are concerned a weakening property market could feed a vicious downward spiral of falling consumer demand and rising unemployment.
Futures markets suggest the Bank of England will cut interest rates to 4.75 percent next week and to 4 percent by this time next year.
A Reuters poll this week showed 45 of 66 economists polled September 29-October 1 said the BoE would hold rates at 5.0 percent next week. A cut by the end of the year is now almost a certainty with forecasters in the poll.
(Reporting by Christina Fincher; Editing by Mike Peacock/Toby Chopra)
06 September 2008
New Channel 4 Progrmme on housing
http://www.guardian.co.uk/society/2008/sep/05/housing.houseprices
Well worth a read......
Starts next Monday........
Well worth a read......
Starts next Monday........
04 September 2008
Peter Schiff ~ Eye of the Storm
In The Eye of The Storm
Peter Schiff
Sep 4, 2008
As we enter the height of the hurricane season, it may be worthwhile to recall, when considering the economy at large, the particular deception that lurks in the "eye" of the storm. After a raging tempest, the sudden appearance of the calm 'eye' can all too easily encourage people to leave their shelter in order to assess and even repair damage, exposing themselves to the often more devastating second leg of the hurricane.
We have long warned our readers of a coming real estate crash which would then lead to a credit crunch, and eventually a major round of bank failures. We have argued that these developments would be the precursors to a major recession, and perhaps a depression.
As predicted, the collapsing values of bonds backed by subprime mortgages did indeed lead to a collapse of the entire mortgage market, a bank liquidity crisis, a credit crunch and a steep fall in consumer confidence. This was the first leg of the storm, but the full blown banking collapse and the deep recession are not yet manifest. The conventional wisdom holds that the bullet has been dodged.
The markets are buying this hypothesis. Tempted by the latest crop of economic data that seems to show expansion, U.S. stocks have moved sideways, and even climbed slowly. The U.S. dollar has risen from its lows, and the rate of bank failures appears to be under control. In short, with gold off almost twenty percent from its highs, it looks as if many investors have concluded that the worst of the storm has past, and have decided look for good deals amid the stock market wreckage. Proceed with caution.
At its core, our economy is simply showing the effects of a national depletion of wealth caused by decades of consuming more than we produce and spending more than we earn. The natural corrective mechanism to such a condition is a recession. But recession is very bad for politics, especially in an election year. So, the potential corrective recession has been postponed by a massive injection of billions of dollars into the economy. At a time when we needed serious physical therapy, the government instead offered four massive pain killers:
First, the debased U.S. dollar has boosted exports and helped the GDP to remain positive.
Second, by setting interest rates below the rate of inflation the Federal Reserve discouraged savings and encouraged borrowing and spending.
Third, massive government lending kept the financial service industry solvent and the mortgage lenders operating.
Fourth, stimulus checks have kept American's spending money that they have not earned.
Although these government palliatives have succeeded in calming the immediate crisis (by saddling American taxpayers with massive liabilities), they have not cured the disease. If anything the huge doses indicate that the patient is getting far worse, even if in silence!
Last week, the FDIC announced that bank losses have tripled to $26.4 billion, leading to a fall of 86.5 percent in bank earnings. The Case-Shiller home price index shows American housing to have fallen in value by some 20 percent and still sliding. These massive movements have yet to be felt along the entire economic spectrum... but it is inevitable that they will be.
Don't be lulled into a false sense of security and start buying U.S. equities at seemingly knockdown prices. We are in the eye of the hurricane. Beware of the second leg!
###
For a more in depth analysis of our financial problems and the inherent dangers they pose for the U.S. economy and U.S. dollar denominated investments, read my book "Crash Proof: How to Profit from the Coming Economic Collapse." Click here to buy a copy today.
More importantly, don't wait for reality to set in. Protect your wealth and preserve your purchasing power before it's too late. Discover the best way to buy gold at www.goldyoucanfold.com, download my free research report on the powerful case for investing in foreign equities available at www.researchreportone.com, and subscribe to my free, on-line investment newsletter.
Sep 3, 2008
Peter Schiff
C.E.O. and Chief Global Strategist
Euro Pacific Capital, Inc.
1 800-727-7922
email: pschiff@europac.net
website: www.europac.net
Archives
Mr. Schiff is one of the few non-biased investment advisors (not committed solely to the short side of the market) to have correctly called the current bear market before it began and to have positioned his clients accordingly. As a result of his accurate forecasts on the U.S. stock market, commodities, gold and the dollar, he is becoming increasingly more renowned. He has been quoted in many of the nation's leading newspapers, including The Wall Street Journal, Barron's, Investor's Business Daily, The Financial Times, The New York Times, The Los Angeles Times, The Washington Post, The Chicago Tribune, The Dallas Morning News, The Miami Herald, The San Francisco Chronicle, The Atlanta Journal-Constitution, The Arizona Republic, The Philadelphia Inquirer, and the Christian Science Monitor, and has appeared on CNBC, CNNfn., and Bloomberg. In addition, his views are frequently quoted locally in the Orange County Register.
Mr. Schiff began his investment career as a financial consultant with Shearson Lehman Brothers, after having earned a degree in finance and accounting from U.C. Berkley in 1987. A financial professional for seventeen years he joined Euro Pacific in 1996 and has served as its President since January 2000. An expert on money, economic theory, and international investing, he is a highly recommended broker by many of the nation's financial newsletters and advisory services.
321gold Ltd
Peter Schiff
Sep 4, 2008
As we enter the height of the hurricane season, it may be worthwhile to recall, when considering the economy at large, the particular deception that lurks in the "eye" of the storm. After a raging tempest, the sudden appearance of the calm 'eye' can all too easily encourage people to leave their shelter in order to assess and even repair damage, exposing themselves to the often more devastating second leg of the hurricane.
We have long warned our readers of a coming real estate crash which would then lead to a credit crunch, and eventually a major round of bank failures. We have argued that these developments would be the precursors to a major recession, and perhaps a depression.
As predicted, the collapsing values of bonds backed by subprime mortgages did indeed lead to a collapse of the entire mortgage market, a bank liquidity crisis, a credit crunch and a steep fall in consumer confidence. This was the first leg of the storm, but the full blown banking collapse and the deep recession are not yet manifest. The conventional wisdom holds that the bullet has been dodged.
The markets are buying this hypothesis. Tempted by the latest crop of economic data that seems to show expansion, U.S. stocks have moved sideways, and even climbed slowly. The U.S. dollar has risen from its lows, and the rate of bank failures appears to be under control. In short, with gold off almost twenty percent from its highs, it looks as if many investors have concluded that the worst of the storm has past, and have decided look for good deals amid the stock market wreckage. Proceed with caution.
At its core, our economy is simply showing the effects of a national depletion of wealth caused by decades of consuming more than we produce and spending more than we earn. The natural corrective mechanism to such a condition is a recession. But recession is very bad for politics, especially in an election year. So, the potential corrective recession has been postponed by a massive injection of billions of dollars into the economy. At a time when we needed serious physical therapy, the government instead offered four massive pain killers:
First, the debased U.S. dollar has boosted exports and helped the GDP to remain positive.
Second, by setting interest rates below the rate of inflation the Federal Reserve discouraged savings and encouraged borrowing and spending.
Third, massive government lending kept the financial service industry solvent and the mortgage lenders operating.
Fourth, stimulus checks have kept American's spending money that they have not earned.
Although these government palliatives have succeeded in calming the immediate crisis (by saddling American taxpayers with massive liabilities), they have not cured the disease. If anything the huge doses indicate that the patient is getting far worse, even if in silence!
Last week, the FDIC announced that bank losses have tripled to $26.4 billion, leading to a fall of 86.5 percent in bank earnings. The Case-Shiller home price index shows American housing to have fallen in value by some 20 percent and still sliding. These massive movements have yet to be felt along the entire economic spectrum... but it is inevitable that they will be.
Don't be lulled into a false sense of security and start buying U.S. equities at seemingly knockdown prices. We are in the eye of the hurricane. Beware of the second leg!
###
For a more in depth analysis of our financial problems and the inherent dangers they pose for the U.S. economy and U.S. dollar denominated investments, read my book "Crash Proof: How to Profit from the Coming Economic Collapse." Click here to buy a copy today.
More importantly, don't wait for reality to set in. Protect your wealth and preserve your purchasing power before it's too late. Discover the best way to buy gold at www.goldyoucanfold.com, download my free research report on the powerful case for investing in foreign equities available at www.researchreportone.com, and subscribe to my free, on-line investment newsletter.
Sep 3, 2008
Peter Schiff
C.E.O. and Chief Global Strategist
Euro Pacific Capital, Inc.
1 800-727-7922
email: pschiff@europac.net
website: www.europac.net
Archives
Mr. Schiff is one of the few non-biased investment advisors (not committed solely to the short side of the market) to have correctly called the current bear market before it began and to have positioned his clients accordingly. As a result of his accurate forecasts on the U.S. stock market, commodities, gold and the dollar, he is becoming increasingly more renowned. He has been quoted in many of the nation's leading newspapers, including The Wall Street Journal, Barron's, Investor's Business Daily, The Financial Times, The New York Times, The Los Angeles Times, The Washington Post, The Chicago Tribune, The Dallas Morning News, The Miami Herald, The San Francisco Chronicle, The Atlanta Journal-Constitution, The Arizona Republic, The Philadelphia Inquirer, and the Christian Science Monitor, and has appeared on CNBC, CNNfn., and Bloomberg. In addition, his views are frequently quoted locally in the Orange County Register.
Mr. Schiff began his investment career as a financial consultant with Shearson Lehman Brothers, after having earned a degree in finance and accounting from U.C. Berkley in 1987. A financial professional for seventeen years he joined Euro Pacific in 1996 and has served as its President since January 2000. An expert on money, economic theory, and international investing, he is a highly recommended broker by many of the nation's financial newsletters and advisory services.
321gold Ltd
Gangs war on streets of London
Gang warfare on the streets of London as Asian and black youths battle outside Julie Christie's house
By Daily Mail Reporter
Last updated at 10:28 AM on 04th September 2008
Comments (23) Add to My Stories
Armed with metal poles, sticks, a screwdriver and even Wellington boots, two gangs of black and Asian youths fight it out in broad daylight on the streets of London.
The terrifying scenes were captured by a photographer who had been waiting in the street to take a photo of the actress Julie Christie, who lives nearby.
Instead he was faced with a brutal illustration of life in modern Britain as gang warfare erupted around him in broad daylight.
In one picture, a gang member threatens another with a screwdriver, while in another, even a Wellington boot is used as a makeshift weapon.
Enlarge A group of Asians take on a group of Black youths with screwdrivers, spades, metal poles and sticks outside Julie Christie's home
Enlarge
One gang member attacks another with a screwdriver as the two gangs confront one another
Some of the gang members wear masks as they charge down the street waving sticks and other assorted weapons.
The dramatic confrontation took place yesterday afternoon in streets near Columbia Road, in East London, home to the popular Sunday morning flower market.
The battle lasted around 20 minutes and involved at least 10 youths.
According to reports the fight appeared to have its origins in a dispute between a local Asian man and some youths who he had accused of vandalising his property.
Enlarge
Metal poles and sticks are used as weapons as the running battle continues
While the area lies in the heart of London's East End, its terraced houses sell for up to a million pounds each and it is surrounded by fashionable cafes and shops which have sprung up around the flower market.
Scotland Yard said it had received numerous calls about the battle and officers were investigating.
By Daily Mail Reporter
Last updated at 10:28 AM on 04th September 2008
Comments (23) Add to My Stories
Armed with metal poles, sticks, a screwdriver and even Wellington boots, two gangs of black and Asian youths fight it out in broad daylight on the streets of London.
The terrifying scenes were captured by a photographer who had been waiting in the street to take a photo of the actress Julie Christie, who lives nearby.
Instead he was faced with a brutal illustration of life in modern Britain as gang warfare erupted around him in broad daylight.
In one picture, a gang member threatens another with a screwdriver, while in another, even a Wellington boot is used as a makeshift weapon.
Enlarge A group of Asians take on a group of Black youths with screwdrivers, spades, metal poles and sticks outside Julie Christie's home
Enlarge
One gang member attacks another with a screwdriver as the two gangs confront one another
Some of the gang members wear masks as they charge down the street waving sticks and other assorted weapons.
The dramatic confrontation took place yesterday afternoon in streets near Columbia Road, in East London, home to the popular Sunday morning flower market.
The battle lasted around 20 minutes and involved at least 10 youths.
According to reports the fight appeared to have its origins in a dispute between a local Asian man and some youths who he had accused of vandalising his property.
Enlarge
Metal poles and sticks are used as weapons as the running battle continues
While the area lies in the heart of London's East End, its terraced houses sell for up to a million pounds each and it is surrounded by fashionable cafes and shops which have sprung up around the flower market.
Scotland Yard said it had received numerous calls about the battle and officers were investigating.
Bank Rate Held....September Meeting.....
Thursday, Sep 4, 2008
MPC holds UK interest rates at 5%
BBC: Bank keeps UK interest rate at 5%
The Bank of England has kept interest rates on hold at 5% for a fifth month as it struggles to deal with a slowing economy and soaring inflation. But with reports signalling the economy is heading for recession, expectations are rising that the cost of borrowing will be cut by the end of the year. Economic growth ground to a halt in the second quarter of this year, its worst performance since the early 1990s. However, inflation is more than double the Bank's target of 2%.
MPC holds UK interest rates at 5%
BBC: Bank keeps UK interest rate at 5%
The Bank of England has kept interest rates on hold at 5% for a fifth month as it struggles to deal with a slowing economy and soaring inflation. But with reports signalling the economy is heading for recession, expectations are rising that the cost of borrowing will be cut by the end of the year. Economic growth ground to a halt in the second quarter of this year, its worst performance since the early 1990s. However, inflation is more than double the Bank's target of 2%.
Property Price drop accelerates
Property price drop has accelerated
By PA News
September 02 2008
Government help for homebuyers follows 12 months which have seen prices tumble and loans restricted.
- The average UK property has lost 10.5% of its value during the past 12 months, the biggest drop since the final quarter of 1990, according to Nationwide Building Society.
- Property prices fell by 1.9% in August following drops of 1.5% and 0.9% in July and June respectively.
- The average property in the UK currently costs £164,654.
- London house prices dropped by 5.3% in the last month, a report by property agent Rightmove showed.
- The top five worst affected areas in London, when comparing July to August, were Wandsworth, Brent, Kingston upon Thames, Richmond upon Thames and Greenwich.
- Property firm Savills said profits in its estate agency slumped 88% during the first half of this year.
- Buyers are currently putting down average deposits of 20%, falling to around 10% among first-time buyers, according to the Council of Mortgage Lenders.
- Figures show that 144,400 first-time buyers got on the property ladder between August last year and the beginning of this year, and many of these could now find themselves in negative equity.
- Around 552,000 people bought a property with a 100% mortgage between the beginning of August last year and the end of March, meaning they have no equity cushion against house price falls.
- The Halifax estimate 300,000 first-time buyers entered the market in 2007, the lowest since 1980. This compares with an estimated 900,000 at the peak in 1988.
Related links
The government's plan, region by region
Govt raises stamp duty threshold for a year
Why the government decided to act
Message board: has the government done enough?
Stamp duty relief Q&A
By PA News
September 02 2008
Government help for homebuyers follows 12 months which have seen prices tumble and loans restricted.
- The average UK property has lost 10.5% of its value during the past 12 months, the biggest drop since the final quarter of 1990, according to Nationwide Building Society.
- Property prices fell by 1.9% in August following drops of 1.5% and 0.9% in July and June respectively.
- The average property in the UK currently costs £164,654.
- London house prices dropped by 5.3% in the last month, a report by property agent Rightmove showed.
- The top five worst affected areas in London, when comparing July to August, were Wandsworth, Brent, Kingston upon Thames, Richmond upon Thames and Greenwich.
- Property firm Savills said profits in its estate agency slumped 88% during the first half of this year.
- Buyers are currently putting down average deposits of 20%, falling to around 10% among first-time buyers, according to the Council of Mortgage Lenders.
- Figures show that 144,400 first-time buyers got on the property ladder between August last year and the beginning of this year, and many of these could now find themselves in negative equity.
- Around 552,000 people bought a property with a 100% mortgage between the beginning of August last year and the end of March, meaning they have no equity cushion against house price falls.
- The Halifax estimate 300,000 first-time buyers entered the market in 2007, the lowest since 1980. This compares with an estimated 900,000 at the peak in 1988.
Related links
The government's plan, region by region
Govt raises stamp duty threshold for a year
Why the government decided to act
Message board: has the government done enough?
Stamp duty relief Q&A
31 August 2008
The interview with Jack today..........
Straw says UK can 'weather storm'
Justice secretary defends Labour's "experienced pilot and co-pilot"
Justice Secretary Jack Straw has said Labour is best placed to see Britain through the current economic downturn.
He told BBC One's Andrew Marr Show that economic management under Labour would help the UK to "weather these storms".
He said Chancellor Alistair Darling did not speak out of turn saying economic conditions were the worst for 60 years.
The Tories have said it shows a split between him and Gordon Brown. Mr Straw also ruled out any Labour leadership challenge to the prime minister.
Experience
Mr Straw likened Britain's current economic situation to an airliner passing through turbulence.
There won't be a leadership challenge from me or from anybody else
Jack Straw, Justice Secretary
"The question for the country is who is better to take us through this turbulent period?" he said.
"Is it an experienced pilot and co-pilot in Gordon Brown and Alistair Darling, who have had the experience… or is it two people in David Cameron and George Osborne, who have had no experience of flying a large plane whatsoever."
The Tories have claimed Alastair Darling's comments to the Guardian newspaper "let the cat out of the bag" about the economy and proved that government was divided at the top level.
But Mr Straw insisted the Cabinet was completely in step and stressed that Mr Darling had been referring to the worldwide impact of the credit crunch and soaring food prices, rather than Britain's situation specifically.
This coming 12 months will be the most difficult 12 months the Labour party has had in a generation, quite frankly
Alistair Darling
Darling defends economy warning
Analysis: Darling's frank comments
He said: "We talk to each other all the time, each of us talks for the other. I'm sorry about this, but we're not clones of each other, and we sometimes use different adverbs and adjectives.
"The message from Gordon, from Alistair, from colleagues like myself, has been the same: we've had a very good period of economic management and economic success which has, for sure, provided us with a really serious platform to weather these storms."
Asked if he could rule himself out of any leadership challenge, Mr Straw said: "Yes. There won't be a leadership challenge from me or from anybody else."
Housing market
Mr Straw refused to speculate on possible measures to bolster the ailing housing market. But he said the government had already announced plans to allow local authorities to buy unsold homes to let to tenants.
"This is actually really important. Because of the credit crunch, because of the difficulty people find in getting mortgages, there is a market in the private sector that is, to say the least, not as buoyant as it was.
"Local authorities have said to us… why can't we go into the market to buy some of these houses. We have listened and we have acted very quickly."
Justice secretary defends Labour's "experienced pilot and co-pilot"
Justice Secretary Jack Straw has said Labour is best placed to see Britain through the current economic downturn.
He told BBC One's Andrew Marr Show that economic management under Labour would help the UK to "weather these storms".
He said Chancellor Alistair Darling did not speak out of turn saying economic conditions were the worst for 60 years.
The Tories have said it shows a split between him and Gordon Brown. Mr Straw also ruled out any Labour leadership challenge to the prime minister.
Experience
Mr Straw likened Britain's current economic situation to an airliner passing through turbulence.
There won't be a leadership challenge from me or from anybody else
Jack Straw, Justice Secretary
"The question for the country is who is better to take us through this turbulent period?" he said.
"Is it an experienced pilot and co-pilot in Gordon Brown and Alistair Darling, who have had the experience… or is it two people in David Cameron and George Osborne, who have had no experience of flying a large plane whatsoever."
The Tories have claimed Alastair Darling's comments to the Guardian newspaper "let the cat out of the bag" about the economy and proved that government was divided at the top level.
But Mr Straw insisted the Cabinet was completely in step and stressed that Mr Darling had been referring to the worldwide impact of the credit crunch and soaring food prices, rather than Britain's situation specifically.
This coming 12 months will be the most difficult 12 months the Labour party has had in a generation, quite frankly
Alistair Darling
Darling defends economy warning
Analysis: Darling's frank comments
He said: "We talk to each other all the time, each of us talks for the other. I'm sorry about this, but we're not clones of each other, and we sometimes use different adverbs and adjectives.
"The message from Gordon, from Alistair, from colleagues like myself, has been the same: we've had a very good period of economic management and economic success which has, for sure, provided us with a really serious platform to weather these storms."
Asked if he could rule himself out of any leadership challenge, Mr Straw said: "Yes. There won't be a leadership challenge from me or from anybody else."
Housing market
Mr Straw refused to speculate on possible measures to bolster the ailing housing market. But he said the government had already announced plans to allow local authorities to buy unsold homes to let to tenants.
"This is actually really important. Because of the credit crunch, because of the difficulty people find in getting mortgages, there is a market in the private sector that is, to say the least, not as buoyant as it was.
"Local authorities have said to us… why can't we go into the market to buy some of these houses. We have listened and we have acted very quickly."
Evidence of House Price Crash......
House prices crash by 10.5% in just one year - faster than the crash in the 1990's
Thursday, August 28 2008 @ 06:32 AM UTC
Latest Nationwide data shows month-on-month fall on 2% bringing the yearly fall to a staggering double digit value of 10.5%, a value that was predicted for the next 3 years and also a value that was denied could ever happen by estate agents and other mortgage dependent businesses.
At this rate, 30% - 50% within the next 32 months is now almost certain. Prices only go up eh? Missed the boat? Thats one boat I am glad I did not buy a ticket for.
If you have bought in the last 18 months you are probably in negative equity.
If you are a first time buyer, who has resisted the pressure from parents and friends, well done and here are some dinner party quotes to get your own back.
Message for Declan Curry, BBC: You berk.
For a while now I have generously been giving you the benefit of the doubt, thinking perhaps your hands were tied up by Auntie. But... this morning you removed all doubt from my mind, and I am now certain you a shameless non-independent VI, no wonder they let you work at the BBC.
You haven't quite been able to admit to the fundamentals over the past year clearly showing that house price falls are going to be deep, and 12 months ago you ridiculed anyone who thought 10% would happen - well look at the data today.
Your smirky little comment "so prices have fallen, your not going to be able to get a mortgage anyway" directed at people who chose to sit out the lunacy shows nothing but a nasty jealous streak running through you.
You should also know that a lot of people are shortly going to be wiping that grin of your face when they buy properties in cash, or have a hefty deposit for a cheap mortgage.
I hope your high leveraged BTL empire is weighing you down.
Thursday, August 28 2008 @ 06:32 AM UTC
Latest Nationwide data shows month-on-month fall on 2% bringing the yearly fall to a staggering double digit value of 10.5%, a value that was predicted for the next 3 years and also a value that was denied could ever happen by estate agents and other mortgage dependent businesses.
At this rate, 30% - 50% within the next 32 months is now almost certain. Prices only go up eh? Missed the boat? Thats one boat I am glad I did not buy a ticket for.
If you have bought in the last 18 months you are probably in negative equity.
If you are a first time buyer, who has resisted the pressure from parents and friends, well done and here are some dinner party quotes to get your own back.
Message for Declan Curry, BBC: You berk.
For a while now I have generously been giving you the benefit of the doubt, thinking perhaps your hands were tied up by Auntie. But... this morning you removed all doubt from my mind, and I am now certain you a shameless non-independent VI, no wonder they let you work at the BBC.
You haven't quite been able to admit to the fundamentals over the past year clearly showing that house price falls are going to be deep, and 12 months ago you ridiculed anyone who thought 10% would happen - well look at the data today.
Your smirky little comment "so prices have fallen, your not going to be able to get a mortgage anyway" directed at people who chose to sit out the lunacy shows nothing but a nasty jealous streak running through you.
You should also know that a lot of people are shortly going to be wiping that grin of your face when they buy properties in cash, or have a hefty deposit for a cheap mortgage.
I hope your high leveraged BTL empire is weighing you down.
23 August 2008
Seanator Karen Johnson
A remarkable woman steps forward on 911
Senator Karen Johnson has served in the Arizona State Legislature for almost two decades. She is retiring at the end of this session. It has been my honor and privilege to know Senator Johnson. Back in April 2008, Karen was pummeled by the press in Arizona because she dared speak about 911 with some pointed observations and questions. On April 24, 2008, The Arizona-Republic, published a hit piece on her. This piece of drivel is titled, 'Drinking the 9/11 Kool-Aid.' As you can see by reading it, the author believes that no elected official should question any aspect of the Bush Administration's fairy tale of the events about September 11, 2001. This has been the prevailing attitude of the so-called mainstream media, including cable "news" networks since that day. Anyone questioning the hoax perpetrated on the American people is a Kool-Aid drinker or a traitor.
On June 10, 2008, Karen gave a floor speech on 911. She reinforced that millions, not a few "Bush haters," but millions of Americans want a real investigation into 911. She did not exaggerate. I hope you will take ten minutes to watch this amazing woman do what thousands of cowards in public service won't do: Demand a real investigation into the 911 crimes. Before she began her speech, Karen made a packet of information available to every member in the senate. She sincerely and politely asked them to take the time to look at the documentation. She asked them to open their eyes. Such an entreaty was also given by Patrick Henry, March 23, 1775:
"It is natural for man to indulge in the illusions of hope. We are apt to shut our eyes against a paintful truth, and listen to the song of that siren till she transforms us into beasts. Is this the part of wise men, engaged in a great and arduous strugle for liberty? Are we disposed to be of the number of those who having eyes seen not, and having ears hear not, the things which so nearly concern their temporal salvation? For my part, whatever anguish of spirit it may cost, I am willing to know the whole truth -- to know the worst and to provide for it."
In Michael Reagan's eyes, this courageous woman is a traitor to this country for questioning 911 and asking for a real investigation. She explains in her speech why a new investigation is needed and it's based on facts, not conspiracy theories. If questioning our government, even during a war based on nothing but lies, is considered an act of treason and we should all be hunted down and shot, then millions of Americans, me included, are guilty. We demand the truth and we will continue to fight for the truth. Senator Karen Johnson deserves our thanks and respect. Michael Reagan deserves our contempt and jail time.
Links:
1 - Must Watch Dr. Steven Jones on this 911 presentation - open your eyes, America
2 - Bio: Dr. Steven Jones
3 - Must watch this free video presentation (3) parts by David Ray Griffin on 911
4 - Wall Street Journal vs. 'Jersey Girls'
5 - State Says Hundreds Of 9/11 Rescue Workers Now Dead
Admits Undercount
6 - 911 Archives
KAL 007
1 - Incident at Sakhalin
2 - Kal 007 (Sakhalin Incident) - Follow-up
3 - What about the passengers of KAL Flight 007?
4 - Will Bush Demand Putin Release American Hostages?
5 - Anniversary of on-going Cover up Approaches
6 - Official KAL Rescue Site maintained by family members
© 2008 - NewsWithViews.com - All Rights Reserved
Senator Karen Johnson has served in the Arizona State Legislature for almost two decades. She is retiring at the end of this session. It has been my honor and privilege to know Senator Johnson. Back in April 2008, Karen was pummeled by the press in Arizona because she dared speak about 911 with some pointed observations and questions. On April 24, 2008, The Arizona-Republic, published a hit piece on her. This piece of drivel is titled, 'Drinking the 9/11 Kool-Aid.' As you can see by reading it, the author believes that no elected official should question any aspect of the Bush Administration's fairy tale of the events about September 11, 2001. This has been the prevailing attitude of the so-called mainstream media, including cable "news" networks since that day. Anyone questioning the hoax perpetrated on the American people is a Kool-Aid drinker or a traitor.
On June 10, 2008, Karen gave a floor speech on 911. She reinforced that millions, not a few "Bush haters," but millions of Americans want a real investigation into 911. She did not exaggerate. I hope you will take ten minutes to watch this amazing woman do what thousands of cowards in public service won't do: Demand a real investigation into the 911 crimes. Before she began her speech, Karen made a packet of information available to every member in the senate. She sincerely and politely asked them to take the time to look at the documentation. She asked them to open their eyes. Such an entreaty was also given by Patrick Henry, March 23, 1775:
"It is natural for man to indulge in the illusions of hope. We are apt to shut our eyes against a paintful truth, and listen to the song of that siren till she transforms us into beasts. Is this the part of wise men, engaged in a great and arduous strugle for liberty? Are we disposed to be of the number of those who having eyes seen not, and having ears hear not, the things which so nearly concern their temporal salvation? For my part, whatever anguish of spirit it may cost, I am willing to know the whole truth -- to know the worst and to provide for it."
In Michael Reagan's eyes, this courageous woman is a traitor to this country for questioning 911 and asking for a real investigation. She explains in her speech why a new investigation is needed and it's based on facts, not conspiracy theories. If questioning our government, even during a war based on nothing but lies, is considered an act of treason and we should all be hunted down and shot, then millions of Americans, me included, are guilty. We demand the truth and we will continue to fight for the truth. Senator Karen Johnson deserves our thanks and respect. Michael Reagan deserves our contempt and jail time.
Links:
1 - Must Watch Dr. Steven Jones on this 911 presentation - open your eyes, America
2 - Bio: Dr. Steven Jones
3 - Must watch this free video presentation (3) parts by David Ray Griffin on 911
4 - Wall Street Journal vs. 'Jersey Girls'
5 - State Says Hundreds Of 9/11 Rescue Workers Now Dead
Admits Undercount
6 - 911 Archives
KAL 007
1 - Incident at Sakhalin
2 - Kal 007 (Sakhalin Incident) - Follow-up
3 - What about the passengers of KAL Flight 007?
4 - Will Bush Demand Putin Release American Hostages?
5 - Anniversary of on-going Cover up Approaches
6 - Official KAL Rescue Site maintained by family members
© 2008 - NewsWithViews.com - All Rights Reserved
Indict Michael Reagan
INDICT MICHAEL REAGAN, APPLAUD SENATOR KAREN JOHNSON
By: Devvy
June 16, 2008
© 2008 - NewsWithViews.com
“The most brilliant propagandist technique will yield no success unless one fundamental principle is borne in mind constantly - it must confine itself to a few points and repeat them over and over.” Joseph Goebbels, Hitler’s Minister of Propaganda
It takes a lot to shock me anymore, but indeed, shock is what registered when I listened to talk show host, Michael Reagan, blast these words during the second hour of his show, June 10, 2008:
Partial transcript of Reagan’s statements which can be heard here (3:12 minutes):
“Excuse me folks, I'm going to say this. We ought to find the people who are doing this, take them out and shoot them. Really. You take them out, they are traitors to this country, and shoot them. You have a problem with that? Deal with it. You shoot them. You call them traitors, that's what they are, and you shoot them dead. I’ll pay for the bullets. ”Reagan adds, “How about you take Mark Dice out and put him in the middle of a firing range. Tie him to a post, don't blindfold him, let it rip and have some fun with Mark Dice.”
At the end when Reagan says "...these people are just outrageous," I assume it's Reagan's engineer says, "Now you know where the Ron Paul supporters went."
I don't listen to Michael Reagan's show. Like so many others, to me it's just more noise because the serious questions never get asked. The real discussions about issues like the privately owned Federal Reserve, the mis application of the federal income tax, his father's role in the cover up of what really happened to KAL Flight 007, will never happen on his show. He's just another useful fool with his partisan politics. Here and there I've seen Michael Reagan on gab fest programs like Shallow Sean Hannity (FAUX News Network) and never found him to be very intelligent. Fate dealt him a good hand when he was adopted by a popular movie star and future U.S. president.
When I first listened to this segment from his show, I thought, if I said the same thing about Dick Cheney on the air, the FBI would be at my door before the next commercial break. What else can you call what Reagan specifically outlined but solicitation for murder? He's telling his listening audience to go hunt down people who question the government's version of 911 and when you find them, shoot them. Shoot them dead. This wasn't satire. Michael Reagan went so far over the line, he shouldn't just be reprimanded by his boss, he should be charged and indicted.
Who is Mark Dice? I had never heard of him until this happened. It appears he's a 911 activist who has joined with others in a project to present information about 911 to the troops in Iraq. These packages going to active duty soldiers in a war zone was covered on FOX in a 5:12 minute interview with Dice and Megyn Kelly. You can watch this short video here. This is very reminiscent of what happened a long time ago which resulted in what became known as the 'Great Sedition Trial of 1944,' where the defendants were charged with trying to incite mutiny within the troops during WWII; they were not convicted. Dice has filed a report with the FBI.
911 is a very divisive issue and the raw hatred spewed by those who believe the government's version of events, whether their political loyalty is the "right" or "left" is thick as molasses in this country. Michael Reagan's soliciting the murder of Americans for exercising their First Amendment Right (not privilege) is by far and away the most extreme example to date. Americans who do take the time to investigate for themselves the credible research on this issue have found the government's version lacking, including family members who lost loved ones that day. I suppose if the "Jersey Girls" sent their DVD to the troops in Iraq (and Afghanistan), Michael Reagan would include these widows on his list of Americans to be hunted down, killed and he'll pay for the bullets.
One thing I find astounding is the absolute black out of ANY media coverage on Reagan's death threats and solicitation of murder. When I submitted this column two days ago to NWVs, I had been checking all the web sites that are popular, "left" and "right": Huffington Post, Truthout.org, Drudge, Worldnetdaily, FOX, CNN, ABC, MSNBC, etc. Nothing. The exposure has been on independent Internet web sites as well as Dice's, but not a single word has been said about Michael Reagan's call to kill Americans from any "mainstream" media source. Where is the condemnation from any of the MSM and all those web sites? They didn't know about it? Bollocks! It was broadcast live to a huge listening audience. Because Reagan is the son of a former president? That does not excuse what he's done and this is not "protected speech" under the First Amendment, which I fiercely defend even if I disagree with it.
By: Devvy
June 16, 2008
© 2008 - NewsWithViews.com
“The most brilliant propagandist technique will yield no success unless one fundamental principle is borne in mind constantly - it must confine itself to a few points and repeat them over and over.” Joseph Goebbels, Hitler’s Minister of Propaganda
It takes a lot to shock me anymore, but indeed, shock is what registered when I listened to talk show host, Michael Reagan, blast these words during the second hour of his show, June 10, 2008:
Partial transcript of Reagan’s statements which can be heard here (3:12 minutes):
“Excuse me folks, I'm going to say this. We ought to find the people who are doing this, take them out and shoot them. Really. You take them out, they are traitors to this country, and shoot them. You have a problem with that? Deal with it. You shoot them. You call them traitors, that's what they are, and you shoot them dead. I’ll pay for the bullets. ”Reagan adds, “How about you take Mark Dice out and put him in the middle of a firing range. Tie him to a post, don't blindfold him, let it rip and have some fun with Mark Dice.”
At the end when Reagan says "...these people are just outrageous," I assume it's Reagan's engineer says, "Now you know where the Ron Paul supporters went."
I don't listen to Michael Reagan's show. Like so many others, to me it's just more noise because the serious questions never get asked. The real discussions about issues like the privately owned Federal Reserve, the mis application of the federal income tax, his father's role in the cover up of what really happened to KAL Flight 007, will never happen on his show. He's just another useful fool with his partisan politics. Here and there I've seen Michael Reagan on gab fest programs like Shallow Sean Hannity (FAUX News Network) and never found him to be very intelligent. Fate dealt him a good hand when he was adopted by a popular movie star and future U.S. president.
When I first listened to this segment from his show, I thought, if I said the same thing about Dick Cheney on the air, the FBI would be at my door before the next commercial break. What else can you call what Reagan specifically outlined but solicitation for murder? He's telling his listening audience to go hunt down people who question the government's version of 911 and when you find them, shoot them. Shoot them dead. This wasn't satire. Michael Reagan went so far over the line, he shouldn't just be reprimanded by his boss, he should be charged and indicted.
Who is Mark Dice? I had never heard of him until this happened. It appears he's a 911 activist who has joined with others in a project to present information about 911 to the troops in Iraq. These packages going to active duty soldiers in a war zone was covered on FOX in a 5:12 minute interview with Dice and Megyn Kelly. You can watch this short video here. This is very reminiscent of what happened a long time ago which resulted in what became known as the 'Great Sedition Trial of 1944,' where the defendants were charged with trying to incite mutiny within the troops during WWII; they were not convicted. Dice has filed a report with the FBI.
911 is a very divisive issue and the raw hatred spewed by those who believe the government's version of events, whether their political loyalty is the "right" or "left" is thick as molasses in this country. Michael Reagan's soliciting the murder of Americans for exercising their First Amendment Right (not privilege) is by far and away the most extreme example to date. Americans who do take the time to investigate for themselves the credible research on this issue have found the government's version lacking, including family members who lost loved ones that day. I suppose if the "Jersey Girls" sent their DVD to the troops in Iraq (and Afghanistan), Michael Reagan would include these widows on his list of Americans to be hunted down, killed and he'll pay for the bullets.
One thing I find astounding is the absolute black out of ANY media coverage on Reagan's death threats and solicitation of murder. When I submitted this column two days ago to NWVs, I had been checking all the web sites that are popular, "left" and "right": Huffington Post, Truthout.org, Drudge, Worldnetdaily, FOX, CNN, ABC, MSNBC, etc. Nothing. The exposure has been on independent Internet web sites as well as Dice's, but not a single word has been said about Michael Reagan's call to kill Americans from any "mainstream" media source. Where is the condemnation from any of the MSM and all those web sites? They didn't know about it? Bollocks! It was broadcast live to a huge listening audience. Because Reagan is the son of a former president? That does not excuse what he's done and this is not "protected speech" under the First Amendment, which I fiercely defend even if I disagree with it.
09 August 2008
05 August 2008
If Music be the food of the recession, play on.......
Recession means depressing music
Fears of recession, grey summer weather and collapsing house prices have begun to depress the public so much that miserable music is topping internet playlists, it has been claimed.
What's your favourite playlist in these testing times?
Fears of recession, grey summer weather and collapsing house prices have begun to depress the public so much that miserable music is topping internet playlists, it has been claimed.
What's your favourite playlist in these testing times?
Recession ~ How to walk backwards into a brick wall.
The UK is "at serious risk" of recession with the future looking "grim", business leaders have warned.
People are spending less as credit crunch bites
The British Chambers of Commerce says falling orders and rising costs are putting companies under increasing pressure.
Services firms, which account for three-quarters of the economy, saw "alarming" declines in the second quarter of 2008.
Those reporting lower orders outnumbered those recording rises for the first time since 1990.
The BCC quizzed almost 5,000 companies as part of its survey, which found business confidence was at its lowest since 1990.
BCC economic adviser David Kern said the responses showed a "menacing deterioration" in UK prospects.
Firms were equally gloomy about the prospects for the future, he added.
The outlook is grim, and we believe that the correction period is likely to be longer and nastier than anticipated
BCC's economic adviser David Kern
The BCC warned the Government against hitting firms with more taxes in an effort to boost public revenues.
Director-general David Frost said: "The temptation for the Government will be to raise business taxes because the exchequer is running out of money.
"This would be a catastrophe.
"To put more pressure on business would not only restrict growth and hit the consumer hard, it would further crush what our economy is based on - confidence."
Firms are facing soaring costs from rising electricity bills and raw materials as oil approaches $150 a barrel, while banks hit by the crunch clamp down on lending.
This has put cashflow among UK firms under the most pressure since 1992, the BCC said.
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People are spending less as credit crunch bites
The British Chambers of Commerce says falling orders and rising costs are putting companies under increasing pressure.
Services firms, which account for three-quarters of the economy, saw "alarming" declines in the second quarter of 2008.
Those reporting lower orders outnumbered those recording rises for the first time since 1990.
The BCC quizzed almost 5,000 companies as part of its survey, which found business confidence was at its lowest since 1990.
BCC economic adviser David Kern said the responses showed a "menacing deterioration" in UK prospects.
Firms were equally gloomy about the prospects for the future, he added.
The outlook is grim, and we believe that the correction period is likely to be longer and nastier than anticipated
BCC's economic adviser David Kern
The BCC warned the Government against hitting firms with more taxes in an effort to boost public revenues.
Director-general David Frost said: "The temptation for the Government will be to raise business taxes because the exchequer is running out of money.
"This would be a catastrophe.
"To put more pressure on business would not only restrict growth and hit the consumer hard, it would further crush what our economy is based on - confidence."
Firms are facing soaring costs from rising electricity bills and raw materials as oil approaches $150 a barrel, while banks hit by the crunch clamp down on lending.
This has put cashflow among UK firms under the most pressure since 1992, the BCC said.
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UK Banks ~ It's all down hill on the numbers
UK banks – the story so far
Richard Hunter, head of UK equities, Hargreaves Lansdown
August 04 2008
With more than half of the UK banks' half-year reporting season now completed, the overall numbers have not made for good reading.
Admittedly, much of the bad news (which has subsequently been borne out) had been largely factored into share prices which have, on the whole, taken a mauling over the last year. Nonetheless, with eyes particularly focused on the likes of Barclays and RBS, it would appear that this season could prove to be one to forget.
Banking woes
The reports were kicked off when Lloyds TSB reported a 70% dip in half-year profits and as such these numbers represented a cautious opening, with profits largely pegged back by a hit in investment writedowns.
Whilst the group's exposure to the US subprime fallout is negligible compared to some of its peers, it nonetheless remains exposed to the UK consumer and the level of defaults is expected to increase, albeit on a manageable basis. It appears that Lloyds did not totally discount an overseas acquisition to achieve greater diversification, even though the reported German approach recently came to nothing.
Lloyds has not, of course, been totally immune to the wider credit crisis and the shares have dipped some 40% over the last year. Nonetheless, concerns regarding the sustainability of the dividend have been firmly quashed, with the clear attractions of a near 12% dividend yield remaining intact. On balance, the general market view towards the shares remains neutral for the time being.
HBOS followed, and rather strangely the current trend in global banking stocks diametrically to oppose the news continued again with the company posting a 51% decline in profits whilst seeing an 8% spike in its share price in early trade.
Stocks rise as profits fall
There was a Merrill Lynch type reaction to the numbers, in that there were no nasty surprises and therefore another contribution to the beginning of the end of the credit crunch may have been made. The actual profit figures were slightly ahead of expectations and the recent rights issue will help shore up the capital ratio to one of the healthiest in Europe, according to the bank's management.
Concerns still linger in the form of the group's exposure to the UK environment and, in particular, the buy-to-let market in which Halifax is a major player. Further disposals of assets have not been ruled out if the price is right, and if the economic landscape deteriorates sufficiently. Despite a 71% drop in the share price over the last year, the existence of better value in the sector leaves the shares as a weak hold in market consensus terms.
The next large bank to report was HSBC, whose results were something of a mixed bag. Some further hefty writedowns continued to negate the progress being made in certain parts of HSBC's global portfolio.
Whilst there were resilient performances in Asia in particular, even growth here is likely to lose a little momentum in the nearer term. This very diversification has been one of the reasons for the bank's relatively strong share price performance, with the shares having posted an 8% gain in the last six months during a period when the vast majority of HSBC's peers have been suffering.
The yield remains supportive at around 5.5% and the rumoured renegotiation on the Korean Exchange Bank stake is further proof of the bank's growth ambitions. Nonetheless, the US situation is proving to be an ongoing drag on profits and, with an economic slowdown in train in many of the developed economies, HSBC has not proved to be the bank to lift some of the gloom on this UK interim reporting season. The market view of the shares remains no more than a hold.
For Barclays and RBS - the latter of which is largely expected actually to post a loss for the period - there will be a late chance to turn sentiment around with some robust numbers. However, if the performance of their peers is anything to go by, this may be asking just a little too much yet.
Richard Hunter, head of UK equities, Hargreaves Lansdown
August 04 2008
With more than half of the UK banks' half-year reporting season now completed, the overall numbers have not made for good reading.
Admittedly, much of the bad news (which has subsequently been borne out) had been largely factored into share prices which have, on the whole, taken a mauling over the last year. Nonetheless, with eyes particularly focused on the likes of Barclays and RBS, it would appear that this season could prove to be one to forget.
Banking woes
The reports were kicked off when Lloyds TSB reported a 70% dip in half-year profits and as such these numbers represented a cautious opening, with profits largely pegged back by a hit in investment writedowns.
Whilst the group's exposure to the US subprime fallout is negligible compared to some of its peers, it nonetheless remains exposed to the UK consumer and the level of defaults is expected to increase, albeit on a manageable basis. It appears that Lloyds did not totally discount an overseas acquisition to achieve greater diversification, even though the reported German approach recently came to nothing.
Lloyds has not, of course, been totally immune to the wider credit crisis and the shares have dipped some 40% over the last year. Nonetheless, concerns regarding the sustainability of the dividend have been firmly quashed, with the clear attractions of a near 12% dividend yield remaining intact. On balance, the general market view towards the shares remains neutral for the time being.
HBOS followed, and rather strangely the current trend in global banking stocks diametrically to oppose the news continued again with the company posting a 51% decline in profits whilst seeing an 8% spike in its share price in early trade.
Stocks rise as profits fall
There was a Merrill Lynch type reaction to the numbers, in that there were no nasty surprises and therefore another contribution to the beginning of the end of the credit crunch may have been made. The actual profit figures were slightly ahead of expectations and the recent rights issue will help shore up the capital ratio to one of the healthiest in Europe, according to the bank's management.
Concerns still linger in the form of the group's exposure to the UK environment and, in particular, the buy-to-let market in which Halifax is a major player. Further disposals of assets have not been ruled out if the price is right, and if the economic landscape deteriorates sufficiently. Despite a 71% drop in the share price over the last year, the existence of better value in the sector leaves the shares as a weak hold in market consensus terms.
The next large bank to report was HSBC, whose results were something of a mixed bag. Some further hefty writedowns continued to negate the progress being made in certain parts of HSBC's global portfolio.
Whilst there were resilient performances in Asia in particular, even growth here is likely to lose a little momentum in the nearer term. This very diversification has been one of the reasons for the bank's relatively strong share price performance, with the shares having posted an 8% gain in the last six months during a period when the vast majority of HSBC's peers have been suffering.
The yield remains supportive at around 5.5% and the rumoured renegotiation on the Korean Exchange Bank stake is further proof of the bank's growth ambitions. Nonetheless, the US situation is proving to be an ongoing drag on profits and, with an economic slowdown in train in many of the developed economies, HSBC has not proved to be the bank to lift some of the gloom on this UK interim reporting season. The market view of the shares remains no more than a hold.
For Barclays and RBS - the latter of which is largely expected actually to post a loss for the period - there will be a late chance to turn sentiment around with some robust numbers. However, if the performance of their peers is anything to go by, this may be asking just a little too much yet.
04 August 2008
House Prices ~ How low can they Go?
Think of a number........say 10%
Think again..............say double it to 20%
Think again and compare it to the latest projection of say HBOS .........say 30%
That's probably not far out over the next 2 years!
Think again..............say double it to 20%
Think again and compare it to the latest projection of say HBOS .........say 30%
That's probably not far out over the next 2 years!
Job cuts Looming in USA........
Looming job cuts march on - report
The number of job cuts announced in July jumps 26%. Airlines and financial firms top the list, according to a monthly study.
NEW YORK (CNNMoney.com) -- The nation's employers continue to put jobs on the chopping block at a steep rate as the economy struggles, according to a new report.
Challenger, Gray & Christmas, an outplacement consultancy firm, said Monday that planned job cuts announced by employers in July jumped 26% to 103,312 from 81,755 announced in June. That's up 141% from a year ago, when employers announced planned job cuts totaling 42,897.
The July figure marks the second-highest number of planned job cuts this year, rivaling the May reading that showed 103,522.
"We have seen job cuts increase in the majority of industries that we track," John Challenger, chief executive of Challenger, Gray & Christmas, said in a statement.
Monday's report indicates that the downturn in the housing and financial sectors, "has spread throughout much of the economy," Challenger said.
Indeed, the report showed job cuts in the works increasing from a year ago in 17 of the 25 industries tracked by Challenger.
Employers in the transportation industry announced the largest number job cuts on the horizon, at 17,051 for the month.
Planned job cuts in the transportation sector were dominated by airlines, which have struggled with soaring fuel costs and declining ticket sales due to softening consumer confidence, according to Challenger.
Transportation was followed by the financial services sector, where employers announced 15,517 job cuts on the block.
Financial firms remained led the year, having already announced 100,775 planned layoffs through July, the report showed.
Employers in the retail and automotive industries also ranked high on the list.
The Challenger report follows a Labor Department report Friday that showed the nation's unemployment rate climbing to a four-year high of 5.7%. It was the worst reading since March 2004, and slightly worse than economists' forecast of 5.6%.
But there was a bright spot in the government's report. The economy lost 51,000 jobs lost in July, which was much lower than the 75,000 loss that economists had expected.
First Published: August 4, 2008: 7:30 AM EDT
Unemployment at 4-year highHow bad is the economy? You weigh in
The number of job cuts announced in July jumps 26%. Airlines and financial firms top the list, according to a monthly study.
NEW YORK (CNNMoney.com) -- The nation's employers continue to put jobs on the chopping block at a steep rate as the economy struggles, according to a new report.
Challenger, Gray & Christmas, an outplacement consultancy firm, said Monday that planned job cuts announced by employers in July jumped 26% to 103,312 from 81,755 announced in June. That's up 141% from a year ago, when employers announced planned job cuts totaling 42,897.
The July figure marks the second-highest number of planned job cuts this year, rivaling the May reading that showed 103,522.
"We have seen job cuts increase in the majority of industries that we track," John Challenger, chief executive of Challenger, Gray & Christmas, said in a statement.
Monday's report indicates that the downturn in the housing and financial sectors, "has spread throughout much of the economy," Challenger said.
Indeed, the report showed job cuts in the works increasing from a year ago in 17 of the 25 industries tracked by Challenger.
Employers in the transportation industry announced the largest number job cuts on the horizon, at 17,051 for the month.
Planned job cuts in the transportation sector were dominated by airlines, which have struggled with soaring fuel costs and declining ticket sales due to softening consumer confidence, according to Challenger.
Transportation was followed by the financial services sector, where employers announced 15,517 job cuts on the block.
Financial firms remained led the year, having already announced 100,775 planned layoffs through July, the report showed.
Employers in the retail and automotive industries also ranked high on the list.
The Challenger report follows a Labor Department report Friday that showed the nation's unemployment rate climbing to a four-year high of 5.7%. It was the worst reading since March 2004, and slightly worse than economists' forecast of 5.6%.
But there was a bright spot in the government's report. The economy lost 51,000 jobs lost in July, which was much lower than the 75,000 loss that economists had expected.
First Published: August 4, 2008: 7:30 AM EDT
Unemployment at 4-year highHow bad is the economy? You weigh in
Gordon Porridge
What a bunch of celebrated colleagues the Labour party is these days ~ full of comrades & brothers & sisters of course.
So, when Gordon Porridge is on holiday his friends strike. First Miliband with an undisguised but cowardly attack and then a venemous leaked letter from Tony.
Ah ~ not much love and respect from that lot.
I would suggest you duck Gordon ~ it may not be the Ides of March but it may well be a Summer monsoon!
Knife crime ~ stabbed in the back by one of your own.
George Bush and the Judge.
Judge: White House aides can be subpoenaed
THE ASSOCIATED PRESS
August 1, 2008
WASHINGTON - A federal judge rejected President George W. Bush's contention that senior White House advisers are immune to subpoenas, siding with Congress' power to investigate the executive branch and handing a victory to Democrats probing the dismissal of nine federal prosecutors.The unprecedented ruling yesterday undercut three presidential confidants who have defied congressional subpoenas for information that Bush says is protected by executive privilege. Democrats swiftly announced they would schedule hearings next month, at the height of election season.House Speaker Nancy Pelosi said the House could soon vote on a contempt citation against one of the three, Karl Rove, formerly Bush's top adviser."It certainly strengthens our hand," she said of the ruling.
The administration must cooperate fully with Congress and that former administration officials Harriet Miers and Karl Rove must testify before Congress."That wasn't clear at all to the White House or Rove's attorney.Bush administration lawyers were reviewing the ruling and were widely expected to appeal. They also could seek a stay that would suspend any further congressional proceedings."We disagree with the district court's decision," White House spokeswoman Dana Perino said.With only a few months left in Bush's presidency, there appeared to be no sense of urgency to make the next move."I have not yet talked with anyone at the White House ... and don't expect that this matter will be finally resolved in the very near future," Rove attorney Robert Luskin said in an e-mail.The case marked the first time Congress has gone to court to demand the testimony of White House aides.In his ruling, U.S. District Judge John Bates said there's no legal basis for Bush's argument and that his former legal counsel, Miers, must appear before Congress. If she wants to refuse to testify, he said, she must do so in person. The committee also has sought to force White House Chief of Staff Joshua Bolten to release documents on any role the White House may have played in the prosecutor firings.Bates, who was appointed to the bench by Bush, issued a 93-page opinion that strongly rejected the administration's legal arguments. He said the executive branch could not point to a single case in which courts held that White House aides were immune from congressional subpoenas.The ruling is a blow to the Bush administration's efforts to bolster the power of the executive branch at the expense of the legislative branch. Disputes over congressional subpoenas are normally resolved through political compromise, not through the court system. Had Bush prevailed, it would have dramatically weakened congressional authority in oversight investigations.Rep. John Conyers (D-Mich.), chairman of the House Judiciary Committee, signaled that hearings would commence in September on the controversy that scandalized the Justice Department and led to the resignation of a longtime presidential confidant, Attorney General Alberto Gonzales.
THE ASSOCIATED PRESS
August 1, 2008
WASHINGTON - A federal judge rejected President George W. Bush's contention that senior White House advisers are immune to subpoenas, siding with Congress' power to investigate the executive branch and handing a victory to Democrats probing the dismissal of nine federal prosecutors.The unprecedented ruling yesterday undercut three presidential confidants who have defied congressional subpoenas for information that Bush says is protected by executive privilege. Democrats swiftly announced they would schedule hearings next month, at the height of election season.House Speaker Nancy Pelosi said the House could soon vote on a contempt citation against one of the three, Karl Rove, formerly Bush's top adviser."It certainly strengthens our hand," she said of the ruling.
The administration must cooperate fully with Congress and that former administration officials Harriet Miers and Karl Rove must testify before Congress."That wasn't clear at all to the White House or Rove's attorney.Bush administration lawyers were reviewing the ruling and were widely expected to appeal. They also could seek a stay that would suspend any further congressional proceedings."We disagree with the district court's decision," White House spokeswoman Dana Perino said.With only a few months left in Bush's presidency, there appeared to be no sense of urgency to make the next move."I have not yet talked with anyone at the White House ... and don't expect that this matter will be finally resolved in the very near future," Rove attorney Robert Luskin said in an e-mail.The case marked the first time Congress has gone to court to demand the testimony of White House aides.In his ruling, U.S. District Judge John Bates said there's no legal basis for Bush's argument and that his former legal counsel, Miers, must appear before Congress. If she wants to refuse to testify, he said, she must do so in person. The committee also has sought to force White House Chief of Staff Joshua Bolten to release documents on any role the White House may have played in the prosecutor firings.Bates, who was appointed to the bench by Bush, issued a 93-page opinion that strongly rejected the administration's legal arguments. He said the executive branch could not point to a single case in which courts held that White House aides were immune from congressional subpoenas.The ruling is a blow to the Bush administration's efforts to bolster the power of the executive branch at the expense of the legislative branch. Disputes over congressional subpoenas are normally resolved through political compromise, not through the court system. Had Bush prevailed, it would have dramatically weakened congressional authority in oversight investigations.Rep. John Conyers (D-Mich.), chairman of the House Judiciary Committee, signaled that hearings would commence in September on the controversy that scandalized the Justice Department and led to the resignation of a longtime presidential confidant, Attorney General Alberto Gonzales.
Can Caesar survive a Brutus?
Can Brown survive his very British Brutus?
From Monday's Globe and Mail
E-mail Doug Saunders Read Bio Latest Columns
August 4, 2008 at 3:56 AM EDT
LONDON — It is a very British coup that has broken out on the beaches of Europe as Prime Minister Gordon Brown's cabinet members begin their summer vacations with talk of insurrection.
Very British in its thrust, which has been both nasty and secretive: Mr. Brown is guilty of "hubris and vacuity," his leadership "a lamentable confusion of tactics and strategy," said a letter, apparently from former prime minister Tony Blair, that was leaked to the London tabloids this weekend in an apparent bid by Mr. Brown's cabinet challengers to undermine him.
And very British in its subtlety: It began with a newspaper article, written by one of Mr. Brown's closest colleagues, that seemed innocuous and even laudatory in its language, but whose coded messages were quicky interpreted by the entire country to be regicidal.
At its centre is a most unlikely Brutus, a 43-year-old child of Eastern European Jewish refugees whose freshman demeanour and intellectual, wonkish bearing seem out of place both in the aristocratic circles of Westminster and in the calloused world of Labour politics.
David Miliband, the Foreign Secretary, is both the youngest member of Mr. Brown's cabinet and, until a few days ago, considered among its most loyal. While this widely admired politician had frequently been listed as a potential successor by many, notably by Mr. Blair's allies, he had turned down bids to run against Mr. Brown.
That all changed on Wednesday, when Mr. Miliband published an article in the Labour-linked Guardian newspaper that, to outsiders, looked like a benign call for Labour Party unity and renewal following a terrible by-election loss to Scottish separatists in the formerly safe Labour riding of Glasgow East.
But the article, written without the permission of 10 Downing St., immediately sent shock waves across British politics and media. This, everyone agreed, was the launch of a mutiny.
To insiders, its message stood out in bright red. First, while arguing that Labour could beat the Tories, it did not in any way defend the Prime Minister's leadership, or even mention his name.
Second, it was written in the language of a political campaign speech: "The times demand a radical new phase ... New Labour won three elections by offering real change, not just in policy but in the way we do politics. We must do so again."
The Times of London, on its front page, called it "the launch of his leadership bid." Most other media outlets followed, and the Ladbrokes betting agency immediately raised its odds on Mr. Miliband becoming Labour leader to 5 to 2.
Mr. Brown sent his loyal MPs - a dwindling group - to counterattack. "I would have sacked him. I think he's been grossly disloyal," MP Geraldine Smith said in an interview apparently authorized by Downing Street, calling Mr. Miliband a "non-entity." Her Labour colleague, Bob Marshall-Andrews, described the article as "pretty contemptible politics" and "duplicitous."
Those words might have worked better against an older and more battle-scarred challenger. But Mr. Miliband, formerly considered a brilliant policy mind but hardly a celebrity, has managed to capture the eye of the nation in a stunningly short period of time, and will be harder to dismiss.
He entered Labour politics 20 years ago as an office assistant, bringing with him a name that opened doors on the left. Mr. Miliband is the son of Ralph Miliband, the Marxist scholar who founded the New Left Review in the 1960s and whose works are known to almost everyone in the Labour Party. David's brother, Ed Miliband, is another member of Mr. Brown's cabinet.
At a moment when British politics, even in the Labour Party, is turning hostile to refugees, Mr. Miliband's experience provides a counterbalance. His parents, both Polish Jews, had fled Hitler's Holocaust across Europe, finally finding themselves in Belgium.
As the tanks approached, they tried to enter Britain legally, but were rebuffed by the Home Secretary, who happened to be the Tory MP for the riding Mr. Miliband now represents.
Fearing for their lives, the Milibands crossed into England as illegal immigrants, using forged papers. Despite this experience, the Milibands quickly rose in British academic life.
Their political dynasty has been pegged as a source of future leaders since David Miliband played a key role in drafting the New Labour manifestos that brought Tony Blair to office in 1997.
On Thursday, in a move widely seen as an effort to quell the unrest, Mr. Brown ordered Mr. Miliband to cancel a planned trip to India in early September, calling him and the rest of his cabinet to his official country residence to announce a large-scale cabinet shuffle.
Mr. Brown's aides said he hopes to rebuild public support for the party before the Labour and Tory conferences at the end of September, possibly by timing the shuffle to coincide with a special windfall tax on energy companies, a populist move likely to please beleaguered British voters.
The stakes are extremely high. Mr. Brown's popularity has fallen in the year since he succeeded Mr. Blair to the point that even Labour's safest seats are now up for grabs. Observers are seriously discussing the possibility that Mr. Brown, should he ever face a general election, worried he might lead his party to the sort of decimating defeat that completely eliminated Britain's Liberal Party a century ago or Canada's Progressive Conservatives 16 years ago.
While polls show that if an election were called today, Mr. Miliband would not beat Conservative Leader David Cameron - another youthful and unorthodox figure in British politics - he would stand a better chance of holding the party together and keeping its core of seats.
On the other hand, there is a strong desire to prevent the Labour conference in September from turning into a full-blown campaign against Mr. Brown, in which groups of MPs raise motions to unseat him in front of national TV cameras.
That would be almost unprecedented in modern British political history.
It would also likely be ineffective: The Labour constitution makes it almost impossible to unseat a sitting prime minister.
Mr. Brown, who succeeded Mr. Blair last year and does not have to call an election until 2010, shows no signs of wanting to step down voluntarily.
But Mr. Miliband's gambit, if that's what it was, seems to have had the desired effect: It has put him at the centre of national attention, ahead of more senior colleagues such as Justice Minister Jack Straw and cabinet member Ed Balls.
As Britain's most volatile government in a generation tries to relax on Europe's beaches, people are talking about the "prosecco plot" or the "cava coup," as the Prime Minister's downfall is planned over glasses of the fizzy wines. And the first name mentioned, thanks to a clever act of newspaper understatement, will be David Miliband.
From Monday's Globe and Mail
E-mail Doug Saunders Read Bio Latest Columns
August 4, 2008 at 3:56 AM EDT
LONDON — It is a very British coup that has broken out on the beaches of Europe as Prime Minister Gordon Brown's cabinet members begin their summer vacations with talk of insurrection.
Very British in its thrust, which has been both nasty and secretive: Mr. Brown is guilty of "hubris and vacuity," his leadership "a lamentable confusion of tactics and strategy," said a letter, apparently from former prime minister Tony Blair, that was leaked to the London tabloids this weekend in an apparent bid by Mr. Brown's cabinet challengers to undermine him.
And very British in its subtlety: It began with a newspaper article, written by one of Mr. Brown's closest colleagues, that seemed innocuous and even laudatory in its language, but whose coded messages were quicky interpreted by the entire country to be regicidal.
At its centre is a most unlikely Brutus, a 43-year-old child of Eastern European Jewish refugees whose freshman demeanour and intellectual, wonkish bearing seem out of place both in the aristocratic circles of Westminster and in the calloused world of Labour politics.
David Miliband, the Foreign Secretary, is both the youngest member of Mr. Brown's cabinet and, until a few days ago, considered among its most loyal. While this widely admired politician had frequently been listed as a potential successor by many, notably by Mr. Blair's allies, he had turned down bids to run against Mr. Brown.
That all changed on Wednesday, when Mr. Miliband published an article in the Labour-linked Guardian newspaper that, to outsiders, looked like a benign call for Labour Party unity and renewal following a terrible by-election loss to Scottish separatists in the formerly safe Labour riding of Glasgow East.
But the article, written without the permission of 10 Downing St., immediately sent shock waves across British politics and media. This, everyone agreed, was the launch of a mutiny.
To insiders, its message stood out in bright red. First, while arguing that Labour could beat the Tories, it did not in any way defend the Prime Minister's leadership, or even mention his name.
Second, it was written in the language of a political campaign speech: "The times demand a radical new phase ... New Labour won three elections by offering real change, not just in policy but in the way we do politics. We must do so again."
The Times of London, on its front page, called it "the launch of his leadership bid." Most other media outlets followed, and the Ladbrokes betting agency immediately raised its odds on Mr. Miliband becoming Labour leader to 5 to 2.
Mr. Brown sent his loyal MPs - a dwindling group - to counterattack. "I would have sacked him. I think he's been grossly disloyal," MP Geraldine Smith said in an interview apparently authorized by Downing Street, calling Mr. Miliband a "non-entity." Her Labour colleague, Bob Marshall-Andrews, described the article as "pretty contemptible politics" and "duplicitous."
Those words might have worked better against an older and more battle-scarred challenger. But Mr. Miliband, formerly considered a brilliant policy mind but hardly a celebrity, has managed to capture the eye of the nation in a stunningly short period of time, and will be harder to dismiss.
He entered Labour politics 20 years ago as an office assistant, bringing with him a name that opened doors on the left. Mr. Miliband is the son of Ralph Miliband, the Marxist scholar who founded the New Left Review in the 1960s and whose works are known to almost everyone in the Labour Party. David's brother, Ed Miliband, is another member of Mr. Brown's cabinet.
At a moment when British politics, even in the Labour Party, is turning hostile to refugees, Mr. Miliband's experience provides a counterbalance. His parents, both Polish Jews, had fled Hitler's Holocaust across Europe, finally finding themselves in Belgium.
As the tanks approached, they tried to enter Britain legally, but were rebuffed by the Home Secretary, who happened to be the Tory MP for the riding Mr. Miliband now represents.
Fearing for their lives, the Milibands crossed into England as illegal immigrants, using forged papers. Despite this experience, the Milibands quickly rose in British academic life.
Their political dynasty has been pegged as a source of future leaders since David Miliband played a key role in drafting the New Labour manifestos that brought Tony Blair to office in 1997.
On Thursday, in a move widely seen as an effort to quell the unrest, Mr. Brown ordered Mr. Miliband to cancel a planned trip to India in early September, calling him and the rest of his cabinet to his official country residence to announce a large-scale cabinet shuffle.
Mr. Brown's aides said he hopes to rebuild public support for the party before the Labour and Tory conferences at the end of September, possibly by timing the shuffle to coincide with a special windfall tax on energy companies, a populist move likely to please beleaguered British voters.
The stakes are extremely high. Mr. Brown's popularity has fallen in the year since he succeeded Mr. Blair to the point that even Labour's safest seats are now up for grabs. Observers are seriously discussing the possibility that Mr. Brown, should he ever face a general election, worried he might lead his party to the sort of decimating defeat that completely eliminated Britain's Liberal Party a century ago or Canada's Progressive Conservatives 16 years ago.
While polls show that if an election were called today, Mr. Miliband would not beat Conservative Leader David Cameron - another youthful and unorthodox figure in British politics - he would stand a better chance of holding the party together and keeping its core of seats.
On the other hand, there is a strong desire to prevent the Labour conference in September from turning into a full-blown campaign against Mr. Brown, in which groups of MPs raise motions to unseat him in front of national TV cameras.
That would be almost unprecedented in modern British political history.
It would also likely be ineffective: The Labour constitution makes it almost impossible to unseat a sitting prime minister.
Mr. Brown, who succeeded Mr. Blair last year and does not have to call an election until 2010, shows no signs of wanting to step down voluntarily.
But Mr. Miliband's gambit, if that's what it was, seems to have had the desired effect: It has put him at the centre of national attention, ahead of more senior colleagues such as Justice Minister Jack Straw and cabinet member Ed Balls.
As Britain's most volatile government in a generation tries to relax on Europe's beaches, people are talking about the "prosecco plot" or the "cava coup," as the Prime Minister's downfall is planned over glasses of the fizzy wines. And the first name mentioned, thanks to a clever act of newspaper understatement, will be David Miliband.
Recession just keeps rolling along.
Rolling Recessions Bring Paralysis to Bernanke, King, Trichet
By Rich Miller and Simon Kennedy
Aug. 4 (Bloomberg) -- Recessions are threatening to crash over the world economy in waves, as one country after another turns down a year after the onset of the global credit crisis.
Such rolling recessions pose a quandary for central bankers Ben S. Bernanke, Jean-Claude Trichet and Mervyn King:
If the whole world were clearly slumping, they'd be united in cutting interest rates. Instead, with some countries still booming, they can't ignore the inflation threat. Paralyzed between slowing growth and accelerating prices, U.S. and European policy makers this week are set to fall back on keeping rates unchanged.
``We're in a peculiar situation where, a year from now, we're likely to look back and say that monetary policy makers have made a very, very serious error,'' says David Lipton, head of global country-risk management for New York-based Citigroup Inc. ``The problem is, we don't know whether we're going to say they were too loose or too tight.''
A lot's at stake. If central bankers leave rates too low, they risk stoking global inflation that's already projected by the International Monetary Fund to be the fastest in nine years. Keep rates too high and the world could fall into its first recession since 2001-2002.
In the past, when the U.S. economy weakened, the rest of the world usually followed quickly, and inflation eased as demand for oil and other commodities fell. U.S. recessions in 1990-1991 and 2001 brought global growth down by half, sending fuel prices tumbling.
Slowdown Delayed
That didn't happen this time. The world expansion barely slowed last year and oil prices surged, even as the U.S. economy shrank in the fourth quarter. Only now -- two years after the U.S. housing boom went bust -- is the slowdown spreading worldwide and the price of oil showing signs of receding.
The world may avoid a recession, deemed by economists to be global growth of 3 percent or less, and still end up with what Allen Sinai, chief economist at Decision Economics in New York, calls a ``witches' brew'' of ailments: declines in the housing and stock markets, a credit crunch and commodity-driven inflation.
The energy and credit crises may have permanently weakened the global economy by making production and investment costlier. Deutsche Bank AG economists say long-term growth may fall to 4 percent from 5 percent.
`Weaker for Longer'
While the world rebounded from its last slump to record the strongest expansion since the 1970s, Richard Berner, co- head of global economics for Morgan Stanley in New York, says that ``growth will have to stay weaker for longer'' this time if central banks are to curb inflationary pressures. ``Investors should consider these developments as a regime change,'' Berner says.
The U.S. risks a relapse after bouncing up in the second quarter as consumers spent some of their $91 billion in tax rebates. ``I don't see recovery'' on the horizon, says Harvard University's Martin Feldstein, who serves on the National Bureau of Economic Research committee that determines when recessions start and end.
The big concern is that consumers -- whose spending accounts for more than 70 percent of the economy -- will cut back after their splurge. The omens aren't good: Overdue payments at the six largest credit-card lenders rose in June after falling the two previous months.
Division at Fed
Chairman Bernanke and his Fed colleagues are divided over what to do next after cutting rates to 2 percent from 5.25 percent a year ago. Some, including Dallas Fed President Richard Fisher, favor tighter credit now to contain inflation. A majority prefer to wait and see how the economy develops.
Kenneth Rogoff, a Harvard economics professor and former IMF chief economist, says Fed policy makers are ``stuck.'' While they may want to raise rates to 3 percent to head off inflationary pressures, they can't for fear of upsetting still- fragile financial markets. Consequently, they'll hold borrowing costs unchanged for ``an extended period,'' he says.
European Central Bank President Trichet's dilemma is similar. After dodging the U.S. slowdown last year, the 15- nation euro-area economy may have shrunk in the second quarter for the first time since the common currency's introduction in 1999. As in the U.S., housing booms in Spain, Portugal and Ireland are collapsing, while the euro's appreciation is hurting companies that export.
Recession Risk
``The risk of a recession is no longer negligible,'' says Holger Schmieding, chief European economist at Bank of America Corp. in London.
When a worldwide slump last began in 2001, the ECB cut interest rates. Not this time.
With inflation the fastest in more than 16 years, the bank raised rates to a seven-year high of 4.25 percent last month. Officials warn they'll do more if workers win big wage deals. Employees at Deutsche Lufthansa AG, Europe's second-biggest airline, last week ended a strike after winning a 5.1 percent pay increase retroactive to July 1, and an additional 2.3 percent increase next year.
``The ECB is clearly walking a tightrope,'' says Martin van Vliet, an economist at ING Bank in Amsterdam, who predicts the bank will keep its key rate unchanged until 2009. ``It has to balance the lingering risk of a wage-price spiral with prospective disinflationary pressures emanating from the downturn,'' he says.
Sharp Debate
The debate is sharper at Governor King's Bank of England. The U.K. is slipping toward its first recession since 1990 as house prices slide after tripling in the past decade. With inflation almost twice the bank's 2 percent target, King's policy panel split three ways last month; the majority voted to keep rates at 5 percent.
Japan, too, is at risk of a recession. Exports fell in June for the first time since 2003 and unemployment reached 4.1 percent, almost a two-year high. The Bank of Japan has little room to act, with its benchmark interest rate of just 0.5 percent and consumer prices rising at the fastest pace in a decade.
``The fog hanging over Japan's economy will stick around for the time being,'' bank board member Atsushi Mizuno said July 24.
Even Asia's rapidly growing emerging economies are showing signs of slowing. The region's policy makers are at odds over how to react as inflation remains high.
Chinese officials suggest they may seek to bolster their economy after growth slowed in the second quarter by the most since 2005. Others remain intent on curbing inflation. India has raised rates three times since May while suffering the weakest growth in five years. Surging food and energy costs prompted Indonesia, Thailand and the Philippines to tighten credit in July.
``There's a kind of stagflation marching over the world economy,'' Sinai says. ``I hope policy makers are able to figure it out and make the right decisions to fight it.''
To contact the reporters on this story: Rich Miller in Washington at rmiller28@bloomberg.netSimon Kennedy in Paris at skennedy4@bloomberg.net Last Updated: August 3, 2008 18:00 EDT
By Rich Miller and Simon Kennedy
Aug. 4 (Bloomberg) -- Recessions are threatening to crash over the world economy in waves, as one country after another turns down a year after the onset of the global credit crisis.
Such rolling recessions pose a quandary for central bankers Ben S. Bernanke, Jean-Claude Trichet and Mervyn King:
If the whole world were clearly slumping, they'd be united in cutting interest rates. Instead, with some countries still booming, they can't ignore the inflation threat. Paralyzed between slowing growth and accelerating prices, U.S. and European policy makers this week are set to fall back on keeping rates unchanged.
``We're in a peculiar situation where, a year from now, we're likely to look back and say that monetary policy makers have made a very, very serious error,'' says David Lipton, head of global country-risk management for New York-based Citigroup Inc. ``The problem is, we don't know whether we're going to say they were too loose or too tight.''
A lot's at stake. If central bankers leave rates too low, they risk stoking global inflation that's already projected by the International Monetary Fund to be the fastest in nine years. Keep rates too high and the world could fall into its first recession since 2001-2002.
In the past, when the U.S. economy weakened, the rest of the world usually followed quickly, and inflation eased as demand for oil and other commodities fell. U.S. recessions in 1990-1991 and 2001 brought global growth down by half, sending fuel prices tumbling.
Slowdown Delayed
That didn't happen this time. The world expansion barely slowed last year and oil prices surged, even as the U.S. economy shrank in the fourth quarter. Only now -- two years after the U.S. housing boom went bust -- is the slowdown spreading worldwide and the price of oil showing signs of receding.
The world may avoid a recession, deemed by economists to be global growth of 3 percent or less, and still end up with what Allen Sinai, chief economist at Decision Economics in New York, calls a ``witches' brew'' of ailments: declines in the housing and stock markets, a credit crunch and commodity-driven inflation.
The energy and credit crises may have permanently weakened the global economy by making production and investment costlier. Deutsche Bank AG economists say long-term growth may fall to 4 percent from 5 percent.
`Weaker for Longer'
While the world rebounded from its last slump to record the strongest expansion since the 1970s, Richard Berner, co- head of global economics for Morgan Stanley in New York, says that ``growth will have to stay weaker for longer'' this time if central banks are to curb inflationary pressures. ``Investors should consider these developments as a regime change,'' Berner says.
The U.S. risks a relapse after bouncing up in the second quarter as consumers spent some of their $91 billion in tax rebates. ``I don't see recovery'' on the horizon, says Harvard University's Martin Feldstein, who serves on the National Bureau of Economic Research committee that determines when recessions start and end.
The big concern is that consumers -- whose spending accounts for more than 70 percent of the economy -- will cut back after their splurge. The omens aren't good: Overdue payments at the six largest credit-card lenders rose in June after falling the two previous months.
Division at Fed
Chairman Bernanke and his Fed colleagues are divided over what to do next after cutting rates to 2 percent from 5.25 percent a year ago. Some, including Dallas Fed President Richard Fisher, favor tighter credit now to contain inflation. A majority prefer to wait and see how the economy develops.
Kenneth Rogoff, a Harvard economics professor and former IMF chief economist, says Fed policy makers are ``stuck.'' While they may want to raise rates to 3 percent to head off inflationary pressures, they can't for fear of upsetting still- fragile financial markets. Consequently, they'll hold borrowing costs unchanged for ``an extended period,'' he says.
European Central Bank President Trichet's dilemma is similar. After dodging the U.S. slowdown last year, the 15- nation euro-area economy may have shrunk in the second quarter for the first time since the common currency's introduction in 1999. As in the U.S., housing booms in Spain, Portugal and Ireland are collapsing, while the euro's appreciation is hurting companies that export.
Recession Risk
``The risk of a recession is no longer negligible,'' says Holger Schmieding, chief European economist at Bank of America Corp. in London.
When a worldwide slump last began in 2001, the ECB cut interest rates. Not this time.
With inflation the fastest in more than 16 years, the bank raised rates to a seven-year high of 4.25 percent last month. Officials warn they'll do more if workers win big wage deals. Employees at Deutsche Lufthansa AG, Europe's second-biggest airline, last week ended a strike after winning a 5.1 percent pay increase retroactive to July 1, and an additional 2.3 percent increase next year.
``The ECB is clearly walking a tightrope,'' says Martin van Vliet, an economist at ING Bank in Amsterdam, who predicts the bank will keep its key rate unchanged until 2009. ``It has to balance the lingering risk of a wage-price spiral with prospective disinflationary pressures emanating from the downturn,'' he says.
Sharp Debate
The debate is sharper at Governor King's Bank of England. The U.K. is slipping toward its first recession since 1990 as house prices slide after tripling in the past decade. With inflation almost twice the bank's 2 percent target, King's policy panel split three ways last month; the majority voted to keep rates at 5 percent.
Japan, too, is at risk of a recession. Exports fell in June for the first time since 2003 and unemployment reached 4.1 percent, almost a two-year high. The Bank of Japan has little room to act, with its benchmark interest rate of just 0.5 percent and consumer prices rising at the fastest pace in a decade.
``The fog hanging over Japan's economy will stick around for the time being,'' bank board member Atsushi Mizuno said July 24.
Even Asia's rapidly growing emerging economies are showing signs of slowing. The region's policy makers are at odds over how to react as inflation remains high.
Chinese officials suggest they may seek to bolster their economy after growth slowed in the second quarter by the most since 2005. Others remain intent on curbing inflation. India has raised rates three times since May while suffering the weakest growth in five years. Surging food and energy costs prompted Indonesia, Thailand and the Philippines to tighten credit in July.
``There's a kind of stagflation marching over the world economy,'' Sinai says. ``I hope policy makers are able to figure it out and make the right decisions to fight it.''
To contact the reporters on this story: Rich Miller in Washington at rmiller28@bloomberg.netSimon Kennedy in Paris at skennedy4@bloomberg.net Last Updated: August 3, 2008 18:00 EDT
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