Speedy recovery in global housing markets unlikely
The collapse of the world’s housing markets is still accelerating according to the Global Property Guide’s latest survey with only Germany and Switzerland achieving a positive momentum in 2008.
Many house-price falls during 2008 were extremely severe. Countries with house price falls of over 10 percent were Latvia (Riga), 37 percent), Lithuania (Vilnius), 27 percent, the US, 20 percent, the UK, 18 percent, Iceland,16 percent, Ireland, 12 percent, and the Ukraine (Kiev),12 percent. (All figures inflation-adjusted).
During the final quarter (Q4) of 2008, the downward price momentum significantly accelerated, as compared to Q3, suggesting that the situation is deteriorating.
The Baltic countries of Latvia and Lithuania suffered the hardest price falls both in nominal and real terms. In Riga, Latvia, the average price of standard-type apartments plunged 37 percent during 2008. Prices have been going down in Latvia since late 2007, after a remarkable increase of about 70 percent in 2006.
The most alarming decline took place in the 4th quarter, when prices declined by 15 percent, the steepest quarterly drop in real terms in any country.
These price falls were triggered by increased interest rates, and by the tightened credit rules which Latvia imposed in 2007.
In the US, the centre of the global financial crisis, 2008 house prices fell 20 percent according to the Case-Shiller house price index, which emphasises urban areas. OFHEO and FHFB figures, which are associated with Fannie Mae and Freddie Mac loans and have somewhat lost credibility, suggest a smaller decline of 6 percent and 3 percent respectively, during 2008.
The US government recently approved a $ 787 billion economic stimulus package, of which $275 billion will be allocated to rescue the ailing housing market.
Canada has been much less affected than the US.
Both Australia and New Zealand saw house price declines during 2008, of 7 percent and 8 percent respectively.
Housing markets in Asia have not been insulated. Singapore’s private residential prices dropped 9 percent during 2008, in sharp contrast to the 26 percent price increase of experienced during 2007.
Hong Kong has been badly hit by the crisis. During the last quarter, Hong Kong experienced a severe decline in prices of 14 percent.
In Makati, Philippines, prime 3-bedroom condominium prices fell by 2 percent during 2008, after an 11 percent price rise during 2007.
Japan recorded modest Tokyo condominium price rises of 1.2 percent during 2008.
In Shanghai, China, house price rises slowed to 5 percent y-o-y by the end of 2008, after peaking at 30 percent y-o-y to May 2008. However Shanghai is likely to be somewhat exceptional and Xinhua News Agency reported house prices declines in 70 major cities during 2008.
In Dubai, UAE, despite the bleak global picture, saw surprisingly large dwelling price rises of 41 percent during 2008. However during the year’s final quarter, prices fell by 8 percent in nominal terms. This downturn is attributable to strongly tightening lending criteria, an increase in interest rates, multiple layoffs, and alarm among buyers.
History suggests that in a crash, housing markets take many years from peak year to full recovery. In view of this and of the pessimistic IMF forecast for the global economy, no real recovery is likely in the global housing markets this year.
The Global Property Guide - www.globalpropertyguide.com -is an on-line property research house, specialising in analyzing residential property valuations around the world.
Showing posts with label 2008. Show all posts
Showing posts with label 2008. Show all posts
10 March 2009
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
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.
02 October 2008
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)
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%.
05 August 2008
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!
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.
Are you about to become NEGATIVE?
Negative Equity To Hit 1.7m UK Homeowners?
Wednesday 30th July 2008
One in seven UK homeowners may face the threat of negative equity throughout the next year as the UK housing market takes a stranglehold, according to a report conducted by Standard & Poor..
The world’s largest credit rating agency’s findings suggest that around 70,000 of the UK’s 12m borrowers currently find themselves in negative equity mainly due to house prices falling in value at an alarming 26%, leading to a further 14% of homeowners slipping into negative equity due to their outstanding mortgages.
Such depressing figures could replicate the dark days of the 1990’s housing crash, where huge numbers of home owners were left financially crippled due to house price declines. Never has establishing the best financial mortgage package been so imperative.
The 70,000 predicted to suffer is already a far larger sum than first envisaged and this figure is expected to rise further with the news that the house price slump has upped its speed, falling 9% on last year, judged on S&P’s Nationwide and Halifax figures.
The ratings agency calculated that for with every percentage point drop in house price from now on, around 60,000 to 80,000 borrowers could realistically enter the dreaded realms of negative equity, with the high loan-to-value mortgages most at threat.
While Standard & Poor’s report agreed that prices are currently heading in a downward direction, with a further 17% fall forecasted, many experts predict a more optimistic outlook with many home owners taking up a mortgage worth more than 90% of the value of their home, allowing the chances of going into negative equity slim, even if house prices fell a realistic 10%.
The report declared, “The current run of house price declines raises the prospect of negative equity for a large number of homeowners, a situation not seen since the 1990’s house price recession.”
Wednesday 30th July 2008
One in seven UK homeowners may face the threat of negative equity throughout the next year as the UK housing market takes a stranglehold, according to a report conducted by Standard & Poor..
The world’s largest credit rating agency’s findings suggest that around 70,000 of the UK’s 12m borrowers currently find themselves in negative equity mainly due to house prices falling in value at an alarming 26%, leading to a further 14% of homeowners slipping into negative equity due to their outstanding mortgages.
Such depressing figures could replicate the dark days of the 1990’s housing crash, where huge numbers of home owners were left financially crippled due to house price declines. Never has establishing the best financial mortgage package been so imperative.
The 70,000 predicted to suffer is already a far larger sum than first envisaged and this figure is expected to rise further with the news that the house price slump has upped its speed, falling 9% on last year, judged on S&P’s Nationwide and Halifax figures.
The ratings agency calculated that for with every percentage point drop in house price from now on, around 60,000 to 80,000 borrowers could realistically enter the dreaded realms of negative equity, with the high loan-to-value mortgages most at threat.
While Standard & Poor’s report agreed that prices are currently heading in a downward direction, with a further 17% fall forecasted, many experts predict a more optimistic outlook with many home owners taking up a mortgage worth more than 90% of the value of their home, allowing the chances of going into negative equity slim, even if house prices fell a realistic 10%.
The report declared, “The current run of house price declines raises the prospect of negative equity for a large number of homeowners, a situation not seen since the 1990’s house price recession.”
House Price Crash ~ GOOD GOOD VERY GOOD
Everybody talks as if falling house prices are a bad thing, nay, a national disaster.
Rising house prices, the logic runs, are therefore a good thing.
But the reverse is true.
Right now, falling house prices are exactly what we need. You know it, I know it.
House prices dropped a record 8.1% over the past 12 months, according to Nationwide, the biggest drop since it started collecting figures in 1991. Other reports suggest that the value of your home could drop by as much as 30% by 2010.
Everybody pretends this is terrible news, but quite frankly, it isn't.
I would argue that most of us are delighted at the thought, and rightly so.
The press, of course, is revelling in all the doom and gloom, but headline-hungry journalists aren't the only ones getting excited by the housing market collapse.
Hoping for the worst
Many of us, not just first-time buyers and rivals for Gordon Brown's job, actively want prices to fall. We would be disappointed if they stabilised, and the housing market became tediously becalmed.
The forthcoming collapse has been so widely predicted that if it doesn't happen, we would all be crushed by the anti-climax.
There is also a collective – and very sensible – horror at the way house prices have spiralled beyond all logic in recent years. We're all financial puritans at heart.
Even people who have cashed in to the tune of hundreds of thousands of pounds have been appalled by this scarcely credible surge in values. If house prices can behave so irrationally, how rational is the rest of our financial system?
The party's over
Add to that widespread distaste at the orgy of debt the UK has indulged in lately, and you can see why many people have been howling for the party to come to an end. It may leave many of us nursing sore heads and negative equity, but we knew all along it would end in tears.
So who gets hurt by a crash? Some will find it painful, but not as many as you think. Existing homeowners may see up to 30% lopped off the value of their home, but their next property has also fallen by 30%, so where's the problem?
Even the 1.7 million that Standard & Poor's estimate face negative equity will only suffer if they absolutely need to move home in the next few years. If you are among their number, you have my sympathy.
Other homeowners will have a shrinking amount of equity to dip into, too. But given that the nation collectively owes £1.4 trillion, the last thing we need is more borrowing.
In my opinion, those who missed out on the house price bonanza should be popping champagne corks. Or better still, saving the money towards a deposit, to allow them to enter the property market at more affordable levels in a year or two.
Any fall must be set in the context of the astronomical gains in recent years. As Nationwide quickly points out, the average house is still worth £11,000 more than three years ago – although admittedly, maybe not for much longer.
So let's not get too carried away, it's not the end of the world as we know it, just an abrupt halt to its wilder excesses.
Short, sharp shock
A short, sharp property crash might do us all some good – and I do believe it is likely to be short and sharp.
Although unemployment is set to rise, it still remains at modest levels. Personal insolvencies and repossessions will increase, but many people will hang on by the skin of their teeth until the recovery comes.
There are also one or two pieces of good news floating around, overlooked in the current carnage.
Swap rates are falling and lenders are cutting their fixed-rate mortgages, which might ease some of the pain for those facing payment shock. Plus there is still a good chance that interest rates could start falling by the end of the year.
Reality bites
Add the fact that we live on a small, squeezed island with a pent-up demand for houses, and you can see the ground is clear for a relatively speedy recovery. But let's hope it isn't too speedy, because we don't want to find ourselves repeating the blunders of the past decade (and the decade before that).
Arguably, the crash is a much-needed jolt of economic reality, and is the first step towards restoring common sense to the property market, and the rest of the economy.
I'll say it again. Falling house prices are a good thing. Enjoy it while it lasts.
Rising house prices, the logic runs, are therefore a good thing.
But the reverse is true.
Right now, falling house prices are exactly what we need. You know it, I know it.
House prices dropped a record 8.1% over the past 12 months, according to Nationwide, the biggest drop since it started collecting figures in 1991. Other reports suggest that the value of your home could drop by as much as 30% by 2010.
Everybody pretends this is terrible news, but quite frankly, it isn't.
I would argue that most of us are delighted at the thought, and rightly so.
The press, of course, is revelling in all the doom and gloom, but headline-hungry journalists aren't the only ones getting excited by the housing market collapse.
Hoping for the worst
Many of us, not just first-time buyers and rivals for Gordon Brown's job, actively want prices to fall. We would be disappointed if they stabilised, and the housing market became tediously becalmed.
The forthcoming collapse has been so widely predicted that if it doesn't happen, we would all be crushed by the anti-climax.
There is also a collective – and very sensible – horror at the way house prices have spiralled beyond all logic in recent years. We're all financial puritans at heart.
Even people who have cashed in to the tune of hundreds of thousands of pounds have been appalled by this scarcely credible surge in values. If house prices can behave so irrationally, how rational is the rest of our financial system?
The party's over
Add to that widespread distaste at the orgy of debt the UK has indulged in lately, and you can see why many people have been howling for the party to come to an end. It may leave many of us nursing sore heads and negative equity, but we knew all along it would end in tears.
So who gets hurt by a crash? Some will find it painful, but not as many as you think. Existing homeowners may see up to 30% lopped off the value of their home, but their next property has also fallen by 30%, so where's the problem?
Even the 1.7 million that Standard & Poor's estimate face negative equity will only suffer if they absolutely need to move home in the next few years. If you are among their number, you have my sympathy.
Other homeowners will have a shrinking amount of equity to dip into, too. But given that the nation collectively owes £1.4 trillion, the last thing we need is more borrowing.
In my opinion, those who missed out on the house price bonanza should be popping champagne corks. Or better still, saving the money towards a deposit, to allow them to enter the property market at more affordable levels in a year or two.
Any fall must be set in the context of the astronomical gains in recent years. As Nationwide quickly points out, the average house is still worth £11,000 more than three years ago – although admittedly, maybe not for much longer.
So let's not get too carried away, it's not the end of the world as we know it, just an abrupt halt to its wilder excesses.
Short, sharp shock
A short, sharp property crash might do us all some good – and I do believe it is likely to be short and sharp.
Although unemployment is set to rise, it still remains at modest levels. Personal insolvencies and repossessions will increase, but many people will hang on by the skin of their teeth until the recovery comes.
There are also one or two pieces of good news floating around, overlooked in the current carnage.
Swap rates are falling and lenders are cutting their fixed-rate mortgages, which might ease some of the pain for those facing payment shock. Plus there is still a good chance that interest rates could start falling by the end of the year.
Reality bites
Add the fact that we live on a small, squeezed island with a pent-up demand for houses, and you can see the ground is clear for a relatively speedy recovery. But let's hope it isn't too speedy, because we don't want to find ourselves repeating the blunders of the past decade (and the decade before that).
Arguably, the crash is a much-needed jolt of economic reality, and is the first step towards restoring common sense to the property market, and the rest of the economy.
I'll say it again. Falling house prices are a good thing. Enjoy it while it lasts.
02 June 2008
What a win for Safina
Dinara Safina proved her title credentials with a 6-7 (6-8) 7-6 (7-5) 6-2 win over top seed Maria Sharapova in the fourth round of the French Open.
Sharapova had struggled for form in her opening three matches and many tipped her fellow Russian to cause an upset.
And after letting two set points slip by in the opener, Safina saved a match point in the second set before taking control of a tense decider.
She will play compatriot Elena Dementieva in the quarter-finals.
Safina fought back from 5-1 down in the final set to beat Sharapova at Roland Garros two years ago, but had not really built on that result until Berlin last month when she beat Justine Henin and Serena Williams in consecutive matches.
I was trying to stay more positive, more aggressive
Elena DementievaSharapova, in contrast, came into the tournament as the new world number one but has never enjoyed clay and struggled desperately on serve in her early matches last week.
In a tight first set Safina looked to have the edge but when Sharapova roared back from 6-4 down to take the tie-break, it seemed her champion's mentality would prove the difference.
Safina broke at the start of the second before the rain came, but on the resumption Sharapova stepped up another gear.
She swept through five straight games and got to match point on serve at 5-3, only to see Safina cling on with a blistering backhand.
That was to prove the turning point as the 13th seed forced another tie-break in which she recovered from 5-2 down to level.
The momentum was with her in the decider and she did not waste it, breaking a tiring Sharapova in game six and clinching victory two games later on her second match point.
Can't believe Safina won, Maria played great when they came back after rain
StuartSeventh seed Dementieva moved into the last eight for only the second time with a 6-4 1-6 6-2 victory over another Russian, Vera Zvonarena.
Dementieva, the 2004 runner-up, held her nerve the better in an error-strewn match, her famously shaky serve just about holding up.
"I feel like I've done some work, and it's really improved a little bit," she said.
"It's not perfect yet, but I feel more comfortable. It doesn't make me bad or down when I'm serving now."
Zvonareva made a total of 41 unforced errors, repeatedly smacking her racquet into the ground in frustration as the final set slipped away.
Dementieva sealed victory in one hour 48 minutes, gaining revenge for a defeat by Zvonareva earlier in the year.
"What I think that really helped me was the match we played in Charleston in the semi-finals," said Dementieva.
"I think it was a tough match but I learned my lesson.
"Today on the court when I lost the second set I was trying to stay more positive, more aggressive with her, because I know she's a great clay-court player."
Monday's other fourth-round matches see Svetlana Kuznetsova take on Victoria Azarenka, and Czech Petra Kvitova face Kaia Kanepi of Estonia.
Sharapova had struggled for form in her opening three matches and many tipped her fellow Russian to cause an upset.
And after letting two set points slip by in the opener, Safina saved a match point in the second set before taking control of a tense decider.
She will play compatriot Elena Dementieva in the quarter-finals.
Safina fought back from 5-1 down in the final set to beat Sharapova at Roland Garros two years ago, but had not really built on that result until Berlin last month when she beat Justine Henin and Serena Williams in consecutive matches.
I was trying to stay more positive, more aggressive
Elena DementievaSharapova, in contrast, came into the tournament as the new world number one but has never enjoyed clay and struggled desperately on serve in her early matches last week.
In a tight first set Safina looked to have the edge but when Sharapova roared back from 6-4 down to take the tie-break, it seemed her champion's mentality would prove the difference.
Safina broke at the start of the second before the rain came, but on the resumption Sharapova stepped up another gear.
She swept through five straight games and got to match point on serve at 5-3, only to see Safina cling on with a blistering backhand.
That was to prove the turning point as the 13th seed forced another tie-break in which she recovered from 5-2 down to level.
The momentum was with her in the decider and she did not waste it, breaking a tiring Sharapova in game six and clinching victory two games later on her second match point.
Can't believe Safina won, Maria played great when they came back after rain
StuartSeventh seed Dementieva moved into the last eight for only the second time with a 6-4 1-6 6-2 victory over another Russian, Vera Zvonarena.
Dementieva, the 2004 runner-up, held her nerve the better in an error-strewn match, her famously shaky serve just about holding up.
"I feel like I've done some work, and it's really improved a little bit," she said.
"It's not perfect yet, but I feel more comfortable. It doesn't make me bad or down when I'm serving now."
Zvonareva made a total of 41 unforced errors, repeatedly smacking her racquet into the ground in frustration as the final set slipped away.
Dementieva sealed victory in one hour 48 minutes, gaining revenge for a defeat by Zvonareva earlier in the year.
"What I think that really helped me was the match we played in Charleston in the semi-finals," said Dementieva.
"I think it was a tough match but I learned my lesson.
"Today on the court when I lost the second set I was trying to stay more positive, more aggressive with her, because I know she's a great clay-court player."
Monday's other fourth-round matches see Svetlana Kuznetsova take on Victoria Azarenka, and Czech Petra Kvitova face Kaia Kanepi of Estonia.
Crash in France........
French train crash kills children
A train has struck a school bus in the French Alps close to the Swiss border, killing at least six children, French police say.
The accident occurred at a level crossing near the town of Allinges in France's Haute-Savoie region.
At least 30 people were also injured in the crash at around 1400 (1200 GMT), France's rail operator SNCF said.
French President Nicolas Sarkozy has sent condolences to the victims. An investigation is under way.
"All of us are thinking of the children, the adults, the victims," Mr Sarkozy said. "We can only hope there will be as few victims as possible."
A train has struck a school bus in the French Alps close to the Swiss border, killing at least six children, French police say.
The accident occurred at a level crossing near the town of Allinges in France's Haute-Savoie region.
At least 30 people were also injured in the crash at around 1400 (1200 GMT), France's rail operator SNCF said.
French President Nicolas Sarkozy has sent condolences to the victims. An investigation is under way.
"All of us are thinking of the children, the adults, the victims," Mr Sarkozy said. "We can only hope there will be as few victims as possible."
26 March 2008
Perhaps someone could arrange a second hit ~ except bigger this time!
'Biggest UK meteorite' hit Scotland
'Biggest UK meteorite' hit Scotland
Evidence of the biggest meteorite ever to hit the British Isles has been uncovered in Scotland.
Scientists believe the meteorite struck about 1.2 billion years ago near the town of Ullapool in the north west Highlands.
They found what they believe to be ejected material from a meteorite crater beneath a layer of rock.
They said the material had scattered over a distance of about 30 miles.
It had previously been thought that the unusual rock formations in the area had been formed by volcanic activity.
But the volcanic origins of the rock have always been questioned because there are no volcanic vents or other volcanic sediments nearby.
The findings were made by scientists from Oxford and Aberdeen universities, and feature in the journal Geology.
Ken Amor of Oxford University's department of earth sciences, and co-author of the Geology paper, said chemical tests had shown signs of meteoritic material.
He said: "This is the most spectacular evidence for a meteorite impact within the British Isles found to date, and what we have discovered about this meteorite strike could help us to understand the ancient impacts that shaped the surface of other planets, such as Mars."
He added: "If there had been human observers in Scotland 1.2 billion years ago they would have seen quite a show."
'Biggest UK meteorite' hit Scotland
Evidence of the biggest meteorite ever to hit the British Isles has been uncovered in Scotland.
Scientists believe the meteorite struck about 1.2 billion years ago near the town of Ullapool in the north west Highlands.
They found what they believe to be ejected material from a meteorite crater beneath a layer of rock.
They said the material had scattered over a distance of about 30 miles.
It had previously been thought that the unusual rock formations in the area had been formed by volcanic activity.
But the volcanic origins of the rock have always been questioned because there are no volcanic vents or other volcanic sediments nearby.
The findings were made by scientists from Oxford and Aberdeen universities, and feature in the journal Geology.
Ken Amor of Oxford University's department of earth sciences, and co-author of the Geology paper, said chemical tests had shown signs of meteoritic material.
He said: "This is the most spectacular evidence for a meteorite impact within the British Isles found to date, and what we have discovered about this meteorite strike could help us to understand the ancient impacts that shaped the surface of other planets, such as Mars."
He added: "If there had been human observers in Scotland 1.2 billion years ago they would have seen quite a show."
Post code Burglaries
The top 10 most-burgled cites are:
1 - Nottingham (63.3% above average)
2 - London (50.8% above average)
3 - Bristol (50.7% above average)
4 - Stockport (49.8% above average)
5 - Leeds (46.3% above average)
6 - Manchester (46.0% above average)
7 - Hull (39.4% above average)
8 - Cambridge (35.6% above average)
9 - Sheffield (27.6% above average)
10 - Reading (25.9% above average)
And the biggest surprise for me is Cambridge!!
1 - Nottingham (63.3% above average)
2 - London (50.8% above average)
3 - Bristol (50.7% above average)
4 - Stockport (49.8% above average)
5 - Leeds (46.3% above average)
6 - Manchester (46.0% above average)
7 - Hull (39.4% above average)
8 - Cambridge (35.6% above average)
9 - Sheffield (27.6% above average)
10 - Reading (25.9% above average)
And the biggest surprise for me is Cambridge!!
28 February 2008
Subscribe to:
Posts (Atom)
Posts
