Saturday, June 13, 2009

Green Shoots of Recovery, Yay!!

Some debt porn nerd over at House Price Crash forum has put together a lovely little graph of average UK house prices as a multiple of average UK annual wages, based on data from the Nationwide Building Society going back to 1953...




Average property prices peaked a couple of years ago at over six times average wages. Every property crash in the last 50 years has seen property prices fall back to at least 3.5 times average wages. Which, if history repeats itself, would be a fucking excellent thing - unless anyone really thinks shackling future generations to a historically unsustainable ratio of housing costs to wages is a remotely sensible idea

Wages are either going to have to go up, lots.

Or house prices are going to have to fall further, lots


And I know which of the two options I think is most likely


That's it. That's the story




And no amount of bollocks peddled by vested interests from the mainstream media, politics or business will change that



.

57 comments:

Anonymous said...

Bang on. And the other economic fact is that prices only get out of control because of a bubble of lax and fraudulent lending. And that's over for a fair few years at least, meaning prices will have to fall to a level that is compatible with the funding available to people- ie much lower than now.

gyges said...

People are talking about the Green Shoots of Reality (I think cynicus economicus coined the phrase); I heard an example this afternoon.

Frank Field on Any Questions was talking about gov spending plans, discussing whether or not there would be cuts. He made the point that most of the western govs were squabbling for credit from the markets. He said that if clear and sensible spending plans are not presented then govs will be bounced into making drastic spending cuts literally overnight. He explained the mechanism: the overnight markets would respond badly to either the pound or some gilts (if we can still call them that); this would precipitate some emergency meeting in No 10, the point of which would be to agree spending cuts to placate the markets. Field's argument was that, if it got to this stage (which it looks as though it will), the resulting spending cut would be more brutal than necessary.

Anyway, anyone else seen or heard any Green Shoots of Reality?

Stef said...

"Anyway, anyone else seen or heard any Green Shoots of Reality?"

only on-line

the quality of analysis being peddled in the mainstream is as shite as it's always been

Anonymous said...

Gordon Brown should be sat down and shown whats happening right now in California, Iceland and Ireland because thats where we're heading and how he reacts right now is crucial to whether this is a nasty period of austerity similar to the aftermath of WW2 or an utter catastrophe that brings the country to it's knees.

Which one will it be Gord?

Stef said...

Michael Hudson continues to be the economician of choice for all self-respecting Conspiraloons imho

He gave a pretty good interview to 'Guns and Butter' a few months ago which is no longer available on the G&B website

It is still available as a torrent though

The fact that Hudson sustains his legendary impression of Donald Duck throughout the course of the entire interview is a bonus

Stef said...

"how he reacts right now is crucial to whether this is a nasty period of austerity similar to the aftermath of WW2 or an utter catastrophe that brings the country to it's knees."

a good friend of mine, who shall remain nameless, went to a dinner party a couple of weeks ago which included a retired City of London grandee, who shall also remain nameless

The retired banker sat on the board of a long-established merchant bank and is a member/ grand poobah of all sorts of fruity little establishment clubs

At one point over the meal someone mentioned that there was a very good chance that the UK was terminally fucked...

At which point Mr Poobah berated his fellow diners for their naivity and reminded them that Britain had a tradition of hundreds of years of ingenuity/ piracy/ shifty deals behind it which would survive through the current economic downturn unscathed

The gist of his tirade was that the British were still as cleverer than and more than capable of outsmarting any wogs/ daigos/ chinks out there as they've always been

I believe that Francis Drake and the Opium Trade received honourable mentions

though I suspect that when he was ranting about 'the British' doing OK, come what may, he only had a small subset of the total population in mind

Stef said...

also, a while back on this blog, I had moan about people like Naomi Klein and other spokespeople of the 'established Left' who have gone to a lot of effort convincing Lefties who don't like to do their own thinking that all ther sins of the world can be blamed on large multinational corporations - McDonalds, Exxon, outfits like that

What Klein and Co. never did, certainly not until recently, is highlight the fact that industrial capital is subordinate to financial capital and that it is the overlords of finance, not industry, who ultimately pull the strings

the recent round of bail outs (sic.) in the US, UK and elsewhere have been a pretty good, and undeniable, demonstration of who really is who's bitch

the wealth generated by our system ultimately accumulates in the hands of the bankers, the landowners and pirates, not the factory operators

I mention all this because the UK is home to an awful lot of bankers, land owners and pirates, and has been so for centuries

Anti_NWO said...

This will no doubt have an effect on rental prices so I will be watching the situation closely myself.

Stef said...

perversely, some rents might actually go up for a while

an awful lot of amateur landlords have been effectively subsidising their tenants and hoping to make their money on gains in the resale value of their properties, rather than a profitable rental income

These Muppets are in the process of crashing out of the amateur landlord market

I'm renting a place in NZ for example and the rent is significantly lower than the mortgage repayments would be if I'd taken out an interest only mortgage and bought it

jon doy said...

Gordon Brown should be sat down and shown whats happening right now in California, Iceland and Ireland because thats where we're heading and how he reacts right now is crucial to whether this is a nasty period of austerity similar to the aftermath of WW2 or an utter catastrophe that brings the country to it's knees.

Which one will it be Gord?


brNWO recently said something like "i will not waver, i will finish my task"

i know what i think that task is

to be an epic fail, and to create an epic fail

Anonymous said...

Have you heard about the extremely curious case of the 2 men found with 134 billion dollars worth of US Bonds?

http://market-ticker.denninger.net/archives/1119-The-Saga-Of-The-Bearer-Bonds.html

Anonymous said...

This is almost hilariously blatant - http://www.reuters.com/article/usDollarRpt/idUSN1151467420090611

[i]U.S. Treasury Secretary Timothy Geithner on Friday will meet Japanese Finance Minister Kaoru Yosano and Russian Finance Minister Alexei Kudrin in Italy, the Treasury Department said on Thursday.[/i]

[i]Russia said on Wednesday it would reduce the share of U.S. Treasuries in its reserves and buy bonds issued by the International Monetary Fund.[/i]

At the exact same time as 2 Japanese men where found in Italy smuggling US Treasury bonds, the US Treasury secretary is in Italy, meeting Japanese and Russian finance ministers, and Russia say they're cutting their holdings of US bonds.

Someones, for some reason is having a bit of a laugh aren't they?

gyges said...

"Have you heard about the extremely curious case of the 2 men found with 134 billion dollars worth of US Bonds?"

Sounds like the M-fund ...

What was the name of the 'back-of-the-bus lawyer' who was ruined after cashing in some bearer bonds for someone?

Anti_NWO said...

Its about £650 a month for a reasonable flat around here..sigh.

Anonymous said...

It's odd that the only US source to pick up on this say they're dated '1934', despite the fact Japanese TV shows the bonds and they have pictures of John F Kennedy on.

Now even the forger is very very stupid, or Bloomberg are telling porkies.

Stef said...

"Someones, for some reason is having a bit of a laugh aren't they?"

Am enjoying Cynicus' conversion to the Dark, conspiratorial, Side...

Japan Secretly Selling Smuggled $US bonds?
I need to be very clear before writing this post that it is highly speculative, if not fanciful. As such, I would caution readers to view the post as some wild speculation...


It feels so wrong yet, at the same time, so right, doesn't it Cynicus?

Mwuhahaha!!

Stef said...

When you think about it, belief that elitist class interest is sometimes pursued with deliberate, covert intent isn't an insane proposition at all

Quite the opposite

In fact, you'd have to be a bit irrational, or well paid, to think otherwise

Stef said...

Lord P. would have loved this one

Dr Gloom said...

This story of the smuggling of bonds belongs in a James Bond film. It's a massive smokescreen reminiscent of the Telegraph's 'censoring' of crucial details in an online story about European banks being in deep shit.

The Telegraph's story appeared in February just after the pound had collapsed against major currencies such as the Euro and included the following line :-

"Ministers and officials fear that the process could lead to vicious spiral that threatens to tear both the euro and the EU apart."

The following 'sensitive' paragraphs were edited out of the revised version :-


"European Commission officials have estimated that impaired assets may amount to 44pc of EU bank balance sheets. The Commission estimates that so-called financial instruments in the trading book total £12.3 trillion (13.7 trillion euros), equivalent to about 33pc of EU bank balance sheets.

In addition, so-called 'available for sale instruments' worth £4trillion (4.5 trillion euros), or 11pc of balance sheets, are also added by the Commission to arrive at the headline figure of £16.3 trillion."


Rather tellingly, the censors at the Telegraph apparently forgot to censor the URL of the story - http://www.telegraph.co.uk/finance/financetopics/financialcrisis/4590512/European-banks-may-need-16.3-trillion-bail-out-EC-dcoument-warns.html - and added to the mindfuck by mis-spelling document.

Afterwards I read other people debunking the sum of £16.3 trillion as a virtually impossible figure (I can't remember precise details or sources). It was probably believed by many, given that people had become accustomed to such astronomical numbers mentioned throughout the financial panic.

One thing that doesn't ring true with the Japanese bond-smuggling story is that perhaps the most obvious way to smuggle these bonds would be to get a Japanese diplomat to go direct to Switzerland using a diplomatic bag which wouldn't get searched at customs. The old false-bottomed suitcase sounds a tad amateurish!

The motivations behind the smuggling story are unclear, but the common denominator with the Telegraph story is the currency angle. The timing seems to coincide with important events such as the G8 meeting and much comment regarding the US dollar from world powers like Japan, Russia and China. Bearish sentiment in the dollar is at an extreme with every man and his dog calling for its demise.

Credit has been tightening since March in the form of bond prices which have been falling in tandem with rising stocks (falling bond prices = rising market rates of interest).

Tightening credit conditions eventually cause the destruction of dollar denominated credit, thus shrinking the supply of dollars and causing the dollar to rise in value.

Falling bonds along with rising stocks is a situation known as the 'Jaws of Death' and ALWAYS preceeds a sharp fall in stocks (the longer the duration and the greater the divergence, the sharper the fall).

Sharp falls in stocks will cause more money to go into the relative safe haven of US government bonds, creating demand for dollars (given that the dollar would rise in such a scenario above).

It's options expiry this week (which often means more volatile financial markets) and stocks on Wall Street have been trading sideways in a very narrow range since the start of the month.

Summarising the above, a big fall in stocks is maybe imminent this week together with a rising dollar. It's obvious that the mainstream media in the US has previously played a significant role on the behalf of their masters on Wall Street and are deliberately playing along by keeping silent on the whole affair.

Whatever the motives, I'm certain that whoever benefits from planting this story wants people to believe the opposite to what it apparently implies.

Anonymous said...

I agree Dr Gloom. Regardless of the authenticity of the bonds, the story itself is almost certainly fake.

The question is, why?

Stef said...

and today's only very loosely relevant reading from the Gospel of Bruce Willis is...


MCCLANE: So why nuke the building, Hans?

HANS: When you steal six hundred dollars, you can disappear

...but when you steal six hundred million, they will find you

...unless you play dead

Stef said...

...$600,000,000 of negotiable bearer bonds are, of course, no longer what they used to be

Nowadays Japanese tourists wander round with $134,000,0000,000's worth in their hand luggage

(see also Austin Powers' ransom demands)

Stef said...

Max K on the case

Stef said...

The M-Fund

better and better...

paul said...

Looks like a simple con.

http://cryptogon.com/?p=9095

Speaking of cons, how are these green shoots supposed to survive the unseasonable cold weather?

Stef said...

more Mark Twain than Ian Fleming?

soily said...

Paul, Bloomberg are saying 1934, but the bonds themselves show a picture of President Kennedy on.

I don't believe any forger capable of producing these would be that stupid.

Edo said...

"I don't believe any forger capable of producing these would be that stupid."

Unless they were trying to sell a story to an audience that fed on tid-bits of news-speak. In which case they probably would.

Forging stuff like that isn't that difficult, especially when you already have all the equipment!

Anonymous said...

To forge them wouldn't you need:
a)A real one to base it on
b)Someone whose willing to accept a $1 billion note without checking whether its real.
c)Someone who doesn't know JFK wasn't president in 1934 - http://www.tickerforum.org/cgi-ticker/akcs-www?getimagenr=33491

Or just someone pissing about perhaps.

Dr Gloom said...

A good example of the kinds of stories which I believe Wall Street are intending to disseminate is the following one Japan secretly trying to divest out of their US debt?

Quote :-

"1. The Japanese are trying to secretly divest themselves of about 25% of their US debt. (They own about $600B in US debt.)

2. The Japanese are acting as Chinese or North Korean agents in trying to help them divest themselves of US debt in secret.

3. There is an enormous sum of counterfeit US debt out there and these guys are trying to sell some of it."

Asside from the North Korean angle (a convenient secondary effect), the motives appear to be connected primarily with the value of the dollar.

The date of the arrest of the smugglers was reported to be June 3rd which coincides with the low on the dollar index (the white candle at the low is the June 3rd). I think that the dollar has bottomed and will rise strongly over the medium term for reasons I outlined previously. Stocks appear to have topped out and begun their decline.

It appears to me that the story was intended to suppress the rise in the dollar. The reasons for doing this are open to interpretation but probably include allowing certain inside players to buy time to enter/exit positions and manufacturing a shakedown of the smaller players in the futures markets so that the big boys can load up.

I also can't help thinking that the timing regarding the G8 meeting and the announcement from the Japanese Finance Minister are significant factors.

To summarise, this implausible smuggling story appears to have been deliberately planted in an attempt to spread doubt and fear into the currency markets in order to hurt the dollar over a short period.

Anonymous said...

This story takles another twist -
http://cannonfire.blogspot.com/2009/06/mystery-bonds-enter-cult-now-it-gets.html

He reckons it might be the work of some nefarious North Korean religious cult headed by one Queen Salvacion A. Legaspi...

Private Schulz said...

I thought of it first!!

Dr Gloom said...

It's known that there are interconnecting relationships between the police, intelligence services and criminal gangs to which the smugglers might belong. In any event, it seems the Italian Police knew in advance who to arrest, when to arrest and where to arrest.

Questions of authenticity of the bonds and the exact identities of the smugglers and any associates are probably a smokescreen which adds a certain level of plausible deniability to the whole operation. I have grave doubts as to whether any credible criminals would attempt such a reckless endeavour.

Clues to the provenance of the whole scheme can be found by looking at the timing and the silence from the US media. Wall Street benefits the most and in my opinion most likely directed this puppet show.

Professor Chaos said...

"To summarise, this implausible smuggling story appears to have been deliberately planted in an attempt to spread doubt and fear into the currency markets in order to hurt the dollar over a short period."

whereas, over the medium-long term, the dollar is more than capable of sinking lower than whale shit purely on its own merits

Anti_NWO said...

Prof. Chaos,

Wow. You sounded just like Stef there, and I mean the wording\style, not just your viewpoint.

Professor Chaos said...

we also wear very similar super hero costumes

stef from north london said...

@parabellum

thanks for the linke to the press release on the Italian customs agency website

even that's a bit strange

stef from north london said...

a whole pile of relevant linkage from parabellum that found its way under the wrong post...

http://www.adnkronos.com/IGN/News/Cronaca/?id=3.0.3396869573

http://www.ilgiornale.it/a.pic1?ID=356715

http://www.gdf.it/gdf__informa/notizie_stampa/adnkronos/adnkronos_2009/adnkronos_giugno_2009/info-1518911049.html

http://www.asianews.it/index.php?l=it&art=15456&geo=5&size=A

And related to that, someone posted this:

In November 2002, German customs officers at the Swiss-German border performed a routine search of Johnson's car. Bank statements evidencing US$8 billion in transactions were found in the trunk of his car. He was accompanied in his black Mercedes-Benz by three men: an investment adviser, a personal assistant, and a third of unknown identity.

http://en.wikipedia.org/wiki/Don_Johnson#Legal_problems

Parabellum said...

Depression Porn: The New Taxpayer-funded Subprime Market No One Wants You To Know About
By Yasha Levine


...

It was really a coup de etat for everyone involved. When the subprime market collapsed, President George W. Bush pushed Congress to heavily expand the the FHA loan program, increasing its budget, lowering entry requirements for both lenders and debtors. Eventually, our elected officials even took care of the bothersome 3.5 percent down payment requirement for the loan with all sorts of free cash.

Right now, the FHA is in essence giving out no-money-down loans to anyone who doesn’t already own a house, regardless of credit history.

stef from north london said...

Back in the days when I wasn't a complete Conspiraloon, and still sort of bought into the mainstream view of how economics works, I reckoned that the housing market in the UK/ US had peaked round about 2003

If you have a look at the house price to earnings graph I've included in the post above these comments that was when the earnings: price ratio was about 5 - the historical limit of house price affordability

but the bansksters and politicians drove the levels way past that and are now trying to fuck with the future of generations not yet born

And if anyone persists in believing that this is happening accidentally or unknowingly they've got to be out of their fucking tits

Anti_NWO said...

Then why is the UK government spending £5 billion on "unemployment relief" and a legally binding law on supporting families on low incomes? Yes I know it probably has ulterior motives, I'm curious as to what you think though...

http://news.bbc.co.uk/1/hi/education/8095775.stm

Tiberius said...

Hi Stef,

Was just given a link to your blog as it appears we are now 'graph buddies'. I wrote a brief piece about the bull trap aka dead cat bounce here.

Just wanted to say: Great blog, and keep up the good work!

T.

paul said...

Gold buggery goes mainstream at a 30% premium

RE:AntiNow
Then why is the UK government spending £5 billion on "unemployment relief" and a legally binding law on supporting families on low incomes?

This is just an example of the practice of substituting legislation for action.

It places a duty on various diverse and uncooperative bodies (...central government, councils and services including the police, NHS primary care trusts and youth offending agencies. ..) without any thought for implementation.

A three year cycle of strategy review will ensure most of the money and effort will go into measurement,monitoring and reorganisation.

It wraps it in 'the family' because everyone loves children before they grow up.
After that, they can go get fucked up in the many ways available, including long term structural employment.

Stef said...

Wot Paul said

Stef said...

"Gold buggery goes mainstream at a 30% premium

Gold sold like chocolate from German vending machines"

If things get that bad I think I'd rather have the chocolate

Stef said...

In other news, Lord Patel's earthly remains were cremated on Monday and trundled off behind the curtain to the strains of Hendrix's version of 'All along the Watchtower'

respect

Anti_NWO said...

A three year cycle of strategy review will ensure most of the money and effort will go into measurement, monitoring and reorganisation.

Probably.

It wraps it in 'the family' because everyone loves children before they grow up.
After that, they can go get fucked up in the many ways available, including long term structural employment.


I'd rather be employed than shackled to an awful welfare system though. Not *all* companies are shit to work for you know...

paul said...

thatt should have been 'unemployment'

Anti_NWO said...

That would have made more sense.

There's already an expansive children's database though (with convenient security holes) so I'd imagine this would be tied into it...

Courtesy of J7 forum:

http://z13.invisionfree.com/julyseventh/index.php?showtopic=2822&view=findpost&p=14969237

Jason said...

Green Shoots of Recovery? Hell yeah...$70/bbl Oil baby....lord let me not blow it this time...

stef from south island said...

@J

Hello stranger

It's been a long time

Nice photos

Still working for the Forces of Darkness? :P

love

S.

Anonymous said...

Some new twists and turns in the bond smuggling story -
http://market-ticker.denninger.net/archives/1142-The-Bond-Saga-It-Gets-More-Odd.html

Anonymous said...

http://online.wsj.com/article/SB123828522318566241.html
The Treasury Department said it has about $134.5 billion left in its financial-rescue fund, giving the Obama administration a cushion as it implements expensive programs aimed at unlocking credit markets and boosting ailing industries.


http://www.asianews.it/index.php?l=en&art=15456&size=A
Milan (AsiaNews) – Italy’s financial police (Guardia italiana di Finanza) has seized US bonds worth US 134.5 billion from two Japanese nationals at Chiasso (40 km from Milan) on the border between Italy and Switzerland.


I wonder what the chances of those two very specific sums of money from 2 completely unrelated stories happening to be the same?

gyges said...

"I wonder what the chances of those two very specific sums of money from 2 completely unrelated stories happening to be the same?"

My guess is that this is the M-fund.

gyg3s said...

Here's a bit about Norbert Schlei

Anonymous said...

Oddly the two men appear to have been released, which might suggest they were innocent of the counterfeiting charges.

Anti_NWO said...

Oh dear, Sarkozy running his mouth about burkas on the BBC...