The Bears Have It

[LivinLOS]

Originally Posted by bayleaf

Agree in principal and in fact the real investors (stockholders) in Northern Rock lost their holding or it became valueless. They CHOSE to invest in Northern Rock and lost their money. However the savers are not stockholders and one of the biggest underpinnings of a stable society is that it's people can find a 'safe' home for their savings. Otherwise where are you going to put your money? Most people aren't that savvy with money, just want a moderate return on their savings. Otherwise it's a hiding it under the mattress job.

Well as anyone that had read my posts know.. I am a suspicious and cynical bastrad at the best of times.. So I already spread around assets in top tier big name banks and actively wonder if a name like Barclays could go pop.. People need to have these thoughts, people need to know the risks, just trusting 'government' to solve it isnt the answer.. 'Government' is just the population plus a huge slice of fat and waste in the civil service.. These costs still get met.

I also find it interesting that the population isnt 'savvy enough' to detect a risk when theres a bank that has a poor business model.. But is 'savvy enough' to speculate in property, often while they have a full time job.

So the government HAS to guarantee the savings of the population. Otherwise it's tough luck on the Northern Rock savers and OK if you are a Lloyds Bank saver (for now?!).

Exactly.. Some thought into the credit worthyness of institutions is in order..

It's the job of the government and it's agencies to regulate the financial sector and see problems looming. Obviously they are no good at doing that (surprise). Basically IMO the financial sector 'owns' the government and holds it to ransom. Naturally it's then left to the mug population to pick up the pieces and pay for the mistakes of the government and financial sector. Now the banks are offering higher interest rates to Joe Public so they actually have some money to lend! And offering rights issues to investors to buy shares at more than current market values!

It's the job of the financial services sector to exploit and rip off the people and it's the job of the Government to regulate their excesses so that 'market forces' don't tip the economy over the edge. So the government guaranteeing everyones savings up to the first £35,000 with TAX PAYERS MONEY!! shows just how successful they are and expect to be, after all they don't have any money of their own.

Fine insure them up to 35k as I presume thats costed out in some % of the insurances and premiums.. But they swallowed the whole debt, not the 35k and let it fail.. But the whole bad debt now belongs to every tax paying citizen.. If you had asked every non governmental working citizen "Will you pay 50 GBP for the saving of Northern Rock ??" I wonder how many would have opened thier wallet ?? But thats what they have done.

I have a big problem with big government, I admit I am much of of a Kaczynski type, and I appear to be getting crankier and more and more uptight about it the older I get. To me taxing the population to have huge government systems to bail out people who dont see thier own risk, I think its unhealthy, and creates stupid, risk taking populations who look to 'government' to solve all thier ills. I would prefer a system were people who were prudent were rewarded and people who are not dont.

Hence Recession looms. When (if) the country comes out of recession all the 'lessons learnt' will be forgotten and off we go again! Welcome to boom and bust UK plc.

Lets just hope that this is 'just another recession'.. I still think the odds are in favor of it being something economies get through.. But I also think that slim chance of a real financial meltdown, some chain reaction sparked by a unhedged derivative play, a chain reaction of bank failures, or a hyper inflationary environment exported throughout a dollar connected world.. One of many properly nasty possible events are getting fatter by the month.

[bayleaf]

Originally Posted by LivinLOS

Fine insure them up to 35k as I presume thats costed out in some % of the insurances and premiums.. But they swallowed the whole debt, not the 35k and let it fail.. But the whole bad debt now belongs to every tax paying citizen.. If you had asked every non governmental working citizen "Will you pay 50 GBP for the saving of Northern Rock ??" I wonder how many would have opened thier wallet ?? But thats what they have done.

Fair point. The government exceeded it's remit by going over the 35K using 'our' money. If it was a viable business then another business would have taken it over; not a government that couldn't organise a p*ss up in a brewery, only tax it.

Maybe it's the governments way of keeping us all docile and by 'restoring our faith in the banking sector' by bailing out Northern Rock ensuring we all lemming like continue to deposit in the banks. That way we don't learn the lesson and continue blindly until possible melt down cos we don't know what else to do.

[steve@thaib]

Originally Posted by LivinLOS

I dont want to make this sound like an argument.. I dont mean any posts that way but somehow homes become emotive points..

It's an interesting subject, doesn't have to be an argument even if we don't all agree.

Originally Posted by LivinLOS

Firstly me !! I have never owned, primarily because until Thailand I have been moving non stop.

Actually, the question was '...live in rented homes in the UK'

Originally Posted by LivinLOS

Secondly, that attachment to home ownership, that stability and credibility to mention... I guess I just dont see it.

Well, home ownership has always been a key guide as to the stability and credibility of a person. It demonstrates, in theory, a decent credit history and the ability to commit.

I don't neccessarily buy the idea that all borrowing is bad, that sounds a bit too much like some sort of communist Utopia where we all throw in a few quid before the next tower block gets built. Where would we be as a society if everything had to be paid for in cash up front?

Originally Posted by LivinLOS

Note I am not against owning property, I think if you have found where you want to live then great buy your home. I just think theres times to be in the cycle and times to be out of the cycle.. And this is the former.

Shurely shome mishtake??????

Originally Posted by LivinLOS

Wealthier, more educated, stable etc does not come purely from property ownership IMO. Thats a far bigger topic.

I'm not suggesting that it's entirely the answer. I do think poverty feeds these situations so it's often in the interest of the ruling body to keep people poor, if they were not so poor and disconnected from their country then they might be less inclined to go around killing each other. It is a bigger subject than that though, I agree.

On a general note, I would say that you are looking back into history, and casting your mind much further forwards, than me. I think people take a short term view because, generally, we only have a short time to make our killing and get out.

Nobody takes you seriously up until you are thirty, and you are pretty much scrap by the time you are fifty, so the window opens and closes relatively quickly and the means of taking a risk are there so many people roll the dice. That has been our lot for all our lives.

We may well be in a place where our fundamental thinking on this subject has to change, I can see that, but people who grew up in the Thatcher years were offered what we all saw as an opportunity and we grasped it.

For some, it's about to go sour and I think that's sad. You may be more detached from it than me and dismiss this as a completely predictable function of 'the market' over a period of half a century or more, but regular folk just don't see that bigger picture; we live in the here and now and it's changing in front of our eyes. Some of us are a little flummoxed by it, others are going to be utterly fcuked.

[dfts99]

A wise old guy once said to me "When the bellhops are getting into the market it's time for you to get out" That was in 1987.
The thing about that is if you care about getting in and out of markets there is probably something you have missed about life.

The point is this. In a recession,
Anyone who has pots of spare money will just live cheaply and sit and wait it out. Others who have the time and useful talent will always adjust to the changing scene. Those who never had anything in the first place will wonder what all the fuss is about. The best advice you can get is to put something aside in different places every so often in good and bad times. The sub prime thing has a long way to go. It's a big tree with a lot of people desperatly hanging off it.

[Dupree00]

Well I've read this thread and you know what thay say. Misery loves company.

I have been a live-in owner for 10 yrs. So even though my value has gone down I am still in the money. Now i do the math. So I've lost this much but how much would i have paid in rent if i didn't own? Plus I get a tax break on the interest that i pay for my loan. But that covers the insurance payments. Does the UK allow tax breaks for home ownership?

I am in a very desirable area which is a big factor in value. The area I live is full of BMW's, high end SUV's expensive restaurants, etc. But even though I could afford to buy the high end things I chose not to. The only debt is my loan and the monthy CC card which i pay in full monthly. So by being one of the rare people that will live in his means I do not have to cut back on anything.

Obviously the people that bought at the high expecting to refi after a few years of appreciation are in the toilet. I'm dumbfounded how many people bought into the dream withou any reality in their finances. Some people are just dropping the keys of the house off at the bank and saying you can have it back its not worth paying a loan that is 20% higher than the house. So now they have bad credit. Will that prevent them getting a rental or new car when needed? People are leaving the pets behind too. Animal rescue has noted an increase.

So the fear is how far will it go down?

And will people start to practice fiscal responsibility?

Good luck to the home owners.

[marc26]

Originally Posted by Dupree00

Well I've read this thread and you know what thay say. Misery loves company.

I have been a live-in owner for 10 yrs. So even though my value has gone down I am still in the money. Now i do the math. So I've lost this much but how much would i have paid in rent if i didn't own? Plus I get a tax break on the interest that i pay for my loan. But that covers the insurance payments. Does the UK allow tax breaks for home ownership?

I am in a very desirable area which is a big factor in value. The area I live is full of BMW's, high end SUV's expensive restaurants, etc. But even though I could afford to buy the high end things I chose not to. The only debt is my loan and the monthy CC card which i pay in full monthly. So by being one of the rare people that will live in his means I do not have to cut back on anything.

Obviously the people that bought at the high expecting to refi after a few years of appreciation are in the toilet. I'm dumbfounded how many people bought into the dream withou any reality in their finances. Some people are just dropping the keys of the house off at the bank and saying you can have it back its not worth paying a loan that is 20% higher than the house. So now they have bad credit. Will that prevent them getting a rental or new car when needed? People are leaving the pets behind too. Animal rescue has noted an increase.

So the fear is how far will it go down?

And will people start to practice fiscal responsibility?

Good luck to the home owners.

im right with you
i guess, even though i am kind of young, i am old school
i buy a house to live in it. in it for the long haul

[marc26]

this whole buy and let or buy/redo/flip sort of reminds me of the "day trading" craze
people who arent qualified got buoyed by early succes and then kept going to the cookie jar and got burnt

funniest line i ever heard regarding thr day trading craze

guy i knew said when internet stocks were tumbling "this market is not going to stop goign down until the last plumber who left his day job to trade goes back to plumbing" 555555

[Dupree00]

Originally Posted by marc26

guy i knew said when internet stocks were tumbling "this market is not going to stop goign down until the last plumber who left his day job to trade goes back to plumbing" 555555

Well after the bill i got from my last plumber I wish I was one. Those buggers are expensive.

[Coolhand]

Originally Posted by Dupree00

Plus I get a tax break on the interest that i pay for my loan. But that covers the insurance payments. Does the UK allow tax breaks for home ownership?

Not anymore - it was stopped in 2000; but, if you are a landlord, the interest you pay on your mortgage can be set as an expense against the rental income, to reduce any taxable profit.

[Dupree00]

Originally Posted by Coolhand

Not anymore - it was stopped in 2000;

That's interesting. Why would they revoke a tax law that was pro ownership?

[steve@thaib]

Originally Posted by Dupree00

Well I've read this thread and you know what thay say. Misery loves company.

Sorry if I'm being dumb, but I don't understand this at all. Would you mind explaining?

[Dupree00]

Originally Posted by steve@thaib

Sorry if I'm being dumb, but I don't understand this at all. Would you mind explaining?

People with the same misery (declining home value) take solace in sharing their grief with each other.

[steve@thaib]

Originally Posted by Dupree00

People with the same misery (declining home value) take solace in sharing their grief with each other.

I understood the meaning, it was the relevance of the comment I didn't get.

[Dupree00]

Originally Posted by steve@thaib

I understood the meaning, it was the relevance of the comment I didn't get.

I thought I read that you were depressed about current property value declines as am I.

[steve@thaib]

Originally Posted by Dupree00

I thought I read that you were depressed about current property value declines as am I.

Well, I can't say I'm thrilled about it but 'misery' is the wrong word too, from the first post in the thread:

In conclusion, this isn't a 'woe is me' thread. It's more a 'WTF was I thinking for the last ten years' thread

[Sirgezza]

Originally Posted by Dupree00

That's interesting. Why would they revoke a tax law that was pro ownership?

To help balance the government budget?

It could be asked why people should get tax breaks for buying a property.

[steve@thaib]

Sorry, I wanted to answer this more fully but we are having dramas with one of the more loony Thai women around here and I just had to take the wife to meet the rest of the sewing circle.

I'm not miserable, I'm fearful of where we are heading but I'm not hugely exposed to this. My personal debt is not huge and will be cleared in spring when my car loan finishes, I have a small credit card balance which is normal, I have paid for one overseas trip on a card and then not gone again until the last one is paid for for quite a few years.

My home loan is bigger than I would like, but we would have to see pretty spectacular crashes before I had a problem. I'm paying far less in mortgage payments than I would have to in rent as well, so personally I don't think that this will wipe me out.

I think that all I'm getting here is that I didn't see this coming (I should have - my bad) and that some people out there who gambled that property would always rise in value because it always has are going to suffer.

It looks like the way we have looked at our lives for the last 10-15 years is going to have to change and I'm surprised to be here.

My business looks like it will be ok, I deal with control and audit processes and that is the right field to be in when things get tight and margins matter. So it could be that, whilst my property might not make me any money anytime soon, my business could be in great shape.

I'm not miserable, I'm surprised. I'm hoping that LIL is wrong and the world is in better shape than he believes it to be, but I think that I've made the adjustments that I need to and we can ride this out.

[cotambear]

Originally Posted by dfts99

A wise old guy once said to me "When the bellhops are getting into the market it's time for you to get out" That was in 1987.
The thing about that is if you care about getting in and out of markets there is probably something you have missed about life.

The point is this. In a recession,
Anyone who has pots of spare money will just live cheaply and sit and wait it out. Others who have the time and useful talent will always adjust to the changing scene. Those who never had anything in the first place will wonder what all the fuss is about. The best advice you can get is to put something aside in different places every so often in good and bad times. The sub prime thing has a long way to go. It's a big tree with a lot of people desperatly hanging off it.

"Those who never had anything in the first place will wonder what all the fuss is about".

Big Nope on that I`m afraid.

Printing extra dollars led to extra credit exposure and stored up inflation.
Because oil is traded in dollars the whole world pays through extra oil prices. Extra oil prices translate to extra prices everywhere, including food.

Those with the least ie those who have spend the majority of their income on food - ie the majority of the world - will suffer the most. Those who rely on savings eg oap`s will see the real value of their savings eroded by inflation. Those who work and pay taxes will see tax raises and inflationary attacks on their wages.
The majority will suffer for the recklessness of the elite.

Back in the 20`s the german state got out of paying (harsh) reparations by printing lots of deutchmarks to pay off the allies. Inflation skyrocketed. Then look what happened.

[dfts99]

Originally Posted by cotambear

"Those who never had anything in the first place will wonder what all the fuss is about".

Big Nope on that I`m afraid.

Printing extra dollars led to extra credit exposure and stored up inflation.
Because oil is traded in dollars the whole world pays through extra oil prices. Extra oil prices translate to extra prices everywhere, including food.

Those with the least ie those who have spend the majority of their income on food - ie the majority of the world - will suffer the most. Those who rely on savings eg oap`s will see the real value of their savings eroded by inflation. Those who work and pay taxes will see tax raises and inflationary attacks on their wages.
The majority will suffer for the recklessness of the elite.

Back in the 20`s the german state got out of paying (harsh) reparations by printing lots of deutchmarks to pay off the allies. Inflation skyrocketed. Then look what happened.

Sorry Cotambear, a poor choice of words there.
Those with nothing will of course feel the backlash of a downturn more quickly and more personally than those more fortunate. I should have said they will not understand why this is happening to them in the same way that we do.

Apparently there are 300Mil Chinese who are newly rich but another 700Mil who still have nothing. We are being told here in West Australia that our future welfare depends on what those 300Mil do. Talk about helpless. We number only about 1.2Mil people here.
Perhaps the modern digital money equivalent of printing money is to shore up failing lenders with promises. Mugabe however has the printing presses running flat out. India now has 12% inflation, something they never even bothered to measure until recently.
During the cold war era, many people in the eastern block had money, but there was just nothing worth buying and you had to wait years to buy a car.
After Yeltsin however, they soon found that even their money was worthless.
When the wall came down, If you wanted a flat in east germany, you just moved into one somebody had moved out of.
In China today 1,000 more cars are put on the road each day, but simply breathing in Beijing is the equivalent of smoking 70 cigarettes a day!
It's worth remembering that every bubble that has ever burst has first had its share of inflation.

[hagler]

Being a contrarian investor these times are great for me. I havent had my cheque book out for purchasing property in 3 years now but we have bought 4 properties in the last 3 weeks and if things go the way I think they are going to it wont be unlikely for me to get another 15 to 20 in the coming 12 to 18 months. For those of us with long term investing in mind and the benefit of hindsight from previous "meltdowns" the buying opportunities that the next 2 to 3 years will present are fantastic.

Theres just something so sexy about buying property at a ridiculously cheap price at a "lender in possesion" auction and knowing that some smug little Generation Y f*cker who thought he was invincible cause a 3rd tier lender finance