View Full Version : Financial Lemonaid from "impending" Financial Lemons??
July 16th 03, 10:19 PM
I have been following the thread "Property Prices are still moving
higher in the midlands" with a great deal of interest.
As a Canadian who is contemplating a move back to the UK in the next
couple years with the wife and children I am wondering if there is an
effective way prepairing for the market correction that is coming and
if there is a way of determining how far the powers that be can
inflate the credit bubble before it bursts.
(Personally I would love to see the British Gov't dump it's US,
Japanese and Euro holdings in favor of Gold while the pound is still
"worth" something but that's just me).
I enjoyed reading "The Great Reckoning" as the logic of the book makes
intuitive sense, though as with all things it is difficult to predict
from the writing how to ascertain which straw it is going to be that
will break the camel's back.
Has anyone come across anything that might offer insight into
predicting the start of the correction Nation wide? (UK)
I think that riding the wave up has been quite profitable for a few.
What I am wondering is if it is possible to make more on the long ride
down? Thoughts and insights greatly appreciated
July 17th 03, 12:01 AM
System Prompt > wrote in message
> I have been following the thread "Property Prices are still moving
> higher in the midlands" with a great deal of interest.
> As a Canadian who is contemplating a move back to the UK in the next
> couple years with the wife and children I am wondering if there is an
> effective way prepairing for the market correction that is coming and
> if there is a way of determining how far the powers that be can
> inflate the credit bubble before it bursts.
You have to remember that it is easy to be a Mr. Doom and Gloom
merchant..have you any idea for how many years people have been saying about
this impending doom and gloom senario...
We had it all during the last war, ten years ago! I remember hearing all of
this ten years ago! Allways the same, but somehow we all struggle on.
Don't give any more credibility to them than the people who say
For every expert who thinks its going to be crashes and peopel jumping off
ten story buildings, you can find exactly the same number who have good
You hear some talking about japan....ok fine lets talk about japan...has
anybody any idea of the real standard of living in japan? They are ten times
wealthier than we are....
Germany, you often hear bandied about! Yet its much wealthier than we are,
its citizens enjoy higher standards of wealth and success than we do....
> (Personally I would love to see the British Gov't dump it's US,
> Japanese and Euro holdings in favor of Gold while the pound is still
> "worth" something but that's just me).
> I enjoyed reading "The Great Reckoning" as the logic of the book makes
> intuitive sense, though as with all things it is difficult to predict
> from the writing how to ascertain which straw it is going to be that
> will break the camel's back.
> Has anyone come across anything that might offer insight into
> predicting the start of the correction Nation wide? (UK)
> I think that riding the wave up has been quite profitable for a few.
> What I am wondering is if it is possible to make more on the long ride
> down? Thoughts and insights greatly appreciated
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July 17th 03, 01:32 AM
On Thu, 17 Jul 2003 00:01:35 +0100, "Stephen GoldenGun"
>System Prompt > wrote in message
>> I have been following the thread "Property Prices are still moving
>> higher in the midlands" with a great deal of interest.
>> As a Canadian who is contemplating a move back to the UK in the next
>> couple years with the wife and children I am wondering if there is an
>> effective way prepairing for the market correction that is coming and
>> if there is a way of determining how far the powers that be can
>> inflate the credit bubble before it bursts.
>You have to remember that it is easy to be a Mr. Doom and Gloom
>merchant..have you any idea for how many years people have been saying about
>this impending doom and gloom senario...
>We had it all during the last war, ten years ago! I remember hearing all of
>this ten years ago! Allways the same, but somehow we all struggle on.
Around 1991 my in-laws sold their home (which they had purchased for
around 70,000 in 1983) for just shy of 169,000. They subsequently
bought a bungalow for 80,000 which is now valued at just over 200,000.
GBP. They live in the Midlands and their last home dropped about 12%
in value a year after they sold it. From what I have been able to
find from the UK census (2001 & earlier) people's income has not been
keeping anywhere near the rate of housing inflation. If people's real
income hasn't been rising and there has not been an enormous transfer
of inherited wealth the only rationale for the housing prices that I
can think of is greed induced collective self delusion.
On this side of "the pond" my father purchased a home in the early
1980's for $29,000 CDN that had previously sold for over $120,000
(granted when my father purchased interest rates were 19.5%). The
last time I was in the neighborhoods I spoke with a realtor selling an
almost identical home for $180.000 CDN. Perhaps my family's
experiences have been extremely unusual but if there is a possibility
to purchase a niceish detached house in England for 3.5x the average
salary instead of 8+ x the average salary I would prefer to go that
route even if it were to mean waiting a year or two.
Guess where I am coming from is the viewpoint that it is possible to
make a positive personal outcome from a larger negative situation. I
am trying to figure out if there are any alternate routes to interest
only 50 year mortgages. (well, that & I would HATE to end up in a
negative equity situation, an older colleagues here in Toronto is
still in that situation from a house he purchased in 1991).
>Don't give any more credibility to them than the people who say
>For every expert who thinks its going to be crashes and peopel jumping off
>ten story buildings, you can find exactly the same number who have good
July 17th 03, 07:19 PM
On Thu, 17 Jul 2003 14:51:33 +0100, "Stephen GoldenGun"
>You know you could come to the UK and rent..
>I really think you should reconsider..how do you know for sure that prices
>are going down? In germany house prices are higher, than in the UK, what is
>the average cost of a canadian house?
>What sthe cost of an average US house?
>The thing is, you can still find a house to live in the UK for under thirty
>thousand pounds..if you don't mind living in certain areas.
>I know of houses for sale for £15 thousand pounds, but if you wish to live
>their or not is another matter.
>How do you know that in two years time the market will have not increased
>Really I am not so convinced there will be a huge reduction in price of
I think that is what I will end up doing initially (renting). I
suppose that I am basing my assumption of house price moderation
<drop> on the real estate segments talk of a lack of first time buyers
entering the market and on the global economic stagnation which is
being held with abnormally low interest rates (prime below 4% with
talk of sub 1% if things do not turn around). The average Canadian
home is between 60,000 & 150,000 GBP. Keeping in mind that our
operating costs are significantly higher (winter temps to -20 -->
-40'C and summer highs regularly exceeding +30 -> +35'C with high
humidity in many parts of the country). Add to this transportation
costs; I travel over 110 miles to and from work each day so that I can
live in a city with a low murder rate (usually less than 4 per year in
the city we live in pop, 90,000). My car insurance is over 1,500 GBP
per year with no collision coverage & a clean record.
The average cost of homes in the US is extremely variable. If you
don't mind living in a city like Detroit you can buy a home for 10,000
GBP. Granted you might not live to make more than 8 mortgage payments
and your home owners insurance might cost more than your mortgage but
it is cheap! If you want a reasonable house in a nice neighbourhood
expect to pay at least 110,000 ->170,000 GBP unless you want to live
in a temperate area like SanFran or NY NY, then, the preceding will
buy you a parking spot. I suppose you'll have to add the cost of guns
& ammo relative to the neighbourhood that you live in.
One thing that does happen in the larger urban centers Toronto for
example is that the housing is very cyclical (the last recession my
aunt purchased 5 houses from realtors in the 50,000 GBP range rented
them out for 4 years, did virtually no repairs and re-sold them for
over 100,000 GBP each. People see that and assume that can occur
regardless of purchase price. I have a inkling (now I could be very
wrong) that the UK housing market is over sold and that a correction
will occur. So..... having liquidated assets (and not getting
burned by the stock market correction) I am just trying to figure out
what the best course of action is for my childrens future.
Thanks for any insights.
July 17th 03, 08:37 PM
On Thu, 17 Jul 2003 19:33:33 +0100, "Stephen GoldenGun"
> My car insurance is over 1,500 GBP
>> per year with no collision coverage & a clean record.
>WHAT?????? That is unbelievable! But why? I thought canada you only had to
>worry about bumping into the odd moose or grisly? Do you drive a ferrari?
What? did I read that correctly odd moose or grisly? Now that was
totally uncalled for! I know the "girls" here in North America can be
a bit "big boned" but really... ;-)
With regards to the insurance rates our government about 15 years ago
decided to go to no-fault auto insurance. That, coupled with a large
influx of people from "pain sensitive cultures" has resulted in huge
claim loads. Well that & the fact that our insurance Actuary's aren't
the worlds best gamblers and the stock markets have not suffered fools
the last while. (yes you are correct I work in Auto insurance
Oh yeah My mini van is 10years old and has 120,000 miles on it. If
only a Ferrari.....
>> I have a inkling (now I could be very
>> wrong) that the UK housing market is over sold and that a correction
>> will occur
>I don't think it is definite, but their is a strong probability that it can
>occur! But you might be surprised....I have a theory..I'll tell you about it
>if you want to know?
>Firstly, in the UK, we have a finite number of villages and houses, classed
>as rural properties...I believe the gap between rich and poor has increased,
>giving a two tear economy in some cases...this is not generally allowed for
>in the UK...
>When I travel abroad, people are amazed to know we actually have "poor
>people" in the UK and people who live on the streets! They can't believe it.
What? Poor People in the UK? Surely you jest. When I was over in 97
there was poor people there then. Haven't you "fixed" that problem
yet? What happened to the "third way"? I can't believe it, if you
can't trust a politician to keep their promises who can you trust?
>Anyway...the point is..that period houses are not getting build..as they are
>a finite resource. however, the people hwo can afford them..is
>increasing,,eg. affluent people...therefore they are allways going to be
>going up and up and up in price!
>However, the rest of the market may have followed this trend..but I think it
>might be a permanent trend...houses in pretty villages are at a premium...we
>are not cananda where you have such huge areas..of land.......land and rural
>views here in teh UK is a premium commodity.
>Our land is finite..
>Unspoilt land is finite.
>Villages are finite.
>Number of roads is increasing,,,decreasing this finite resource.
>The number of people wishing to live the "goodlife" is not finite..it is
What ever happened to the 10's of thousands who were supposed to die
of Mad Cow? Can't there be a short lived outbreak of the Black plague
or something that will only affect the nice neighbourhoods?
>Therefore I think those who hope these rural properties will go down will
>keep on hoping, I don't think they will, or if they do, it wont' be by much.
>However, conversely, I think that the other parts of the market, such as new
>homes, appartments, smaller houses, those cheapo properties I was telling
>you about in places like Liverpool, manchester, hull, middlands, etc. might
>see the reversal your talking about.
Hmm.... Do I want to live in Croydon or Liverpool.... I suppose that
Meadowhall in Sheffied used to be an old steel works...... Perhaps if
the properties got cheap enough & I got a bulldozer..... Parkland in
Birmingham.... Think I could get funding from a bank or Building
society? Inner city golf courses...
>So I think the market will get segmented..depending on what you want.
With regards to property in Canada if it provides any insight 90% of
Canadians live within 100 miles of the US border.
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