Re: Hose Prices - is a soft landing possible?

gnashhh.....

U know what I mean!

Pete

I would think that is possible if your message header is correct. Yes there can be a soft landing for hoses.

However Houses, homes, dwellings (what is referred to in the body of the message is another matter). Whenever reality is imposed upon in a market where reality was noticeable by it's absence there is invariably shock and dismay. Many peoples home purchases were predicated upon the notion of an unending inflationary path. Mr Blair is doing everything he can to maintain this folly but it is untenable.

Lets put your market crash this way. You buy a flat in Manchester for £150,000 and the market "gradually cools over 3 years. When you go to sell your property and it only is valued at £60,000 it is going to be "for you" a hard landing. Especially if you still owe £35,000 on it.

You don't hear of people talking about the stock market spike from

1998- 2001 but if it went the opposite way you can bet your bottom dollar that people would be squealing of a crash. Everyone has 20/20 hind site and some people "know" the future (even if they are knowing a different future from the one that occurs).

Luckily everyone is right. It's just a matter of waiting till your view is proven right. In 1929 there were thousands in the US knowing that the market could go higher. Initially they were wrong but after a number of decades they were proven right.

Stephen

PS, You're wrong

I think the idea of a soft landing is that prices don't go down, they just stop going up for a while.

I usually am. Whenever I change lanes, the one I left suddenly becomes the one moving fastest ;-(

Pete

Does the word "landing" not indicate a direction to you?

Well it took until something like 1992 for it to get to pre crash levels in real terms, and I think we are back below that now, or not much higher.

Back then, most people would struggle with the payments for a few years until inflation eroded the real value of the mortgage repayments. Now, people are pushing to their limits, and can expect that to continue for much longer.

I'll take a different stance, I don't think we can expect that to continue for too much longer. When interest rates return to statistical norms, people living beyond their means on interest only mortgages or mortgaged to the hilt will have to come back down to reality and what they can really afford.

I am 100% certain that I will be correct within the next 100 years (give or take 95 years).

Stephen.

1958 according to It also fell back through the level in the mid '70s. Daytona

1958 in money terms. However your $1 was worth a lot more in 1929 than 1958.

I think you're confusing two different crashes. The Dow recovered to pre-1929-crash levels in real terms in the mid to late 1950s. The UK market recovered to pre-1987 crash levels in about 1995 in real terms, and is now below it again (the inflation-adjusted FTSE at the 1987 peak was something like 4500). The Dow is still way above its 1992 levels, never mind 1929 (Alan Greenspan's speech about irrational exuberance was at the end of 1996 when the Dow went through 6000, currently over 9000).

As I've pointed out a number of times, people are *not* pushing their limits or anything close to it, a 3-4* salary mortgage is easily affordable when the mortgage rate is 4%.

Not really. The US was on the gold standard until (IIRC) 1972. If you look at the reference Daytona posted you will see that it uses inflation-adjusted prices, and that inflation from 1929 to 1959 was about 50%, i.e. less than

1.5% a year.

Who really cares about hose prices?

On second thought I think that it would be prudent to lower my certainty level to 99.999% as you mention. I can't believe that I was so reckless in my estimation. Stupid, Stupid, Stupid !

Well I see it this way:

If you look at the British real rate of GDP and rate of growth, add to it "New Labour's" projections for the future adding in future carrying costs you come with a assessment of the credit worthiness of the United Kingdom as a whole.

Then say to yourself. If I were an international bank being approached for a loan, what interest rate would I charge Tony Blair's UK to loan them money for another Millennium Dome?

I think anything under 50% compounded daily would be low.

Stephen