What do you mean by the market correcting itself? There are people who were able to see the flaws in the market, and exploit it for their own financial gain, without allowing the market to self-correct.

Have you seen this film?
https://en.wikipedia.org/wiki/The_Big_Short_(film)

This is offtopic anyway, I don't want to get into any protracted exchanges to be honest. If what I meant is not clear, then let's just forget about it. It really doesn't matter.

Thommo wrote:

crank wrote:

Thommo wrote:

crank wrote:

I can't say I'm 100% convinced, some parts of his case were much stronger than others. But it's a good watch, well worth 20minutes.

Which part is unconvincing? The basic point that banks create the vast majority of money isn't really open to question, it's a relatively easy fact to ascertain.

Lots of it, the consequences of reform, the link to the boom and bust cycle, whether money is created "out of nothing". Hard to be more specific I'm afraid as its now days since I watched it. One example I remember was his differing attitude towards David Cameron's actions and their effects with the effects of his own ideas (which would have the same intermediate effect on money supply).

I'm not saying he's wrong, but there's a lot of uncertainty about various parts where he is expressing apparent certainty.

I couldn't tell if you were addressing the basic fact of money creation, or his ideas and recommendations on the economy. I haven't seen it in more than a year, so I don't remember much of these details, a lot of which are UK-specific anyway.

Thommo wrote:

crank wrote:The cause of these types of bubbles is too much money/too easy credit, lowering interest rates resulting in speculation run amok. Prices keep going up and that gives current assets ever more leverage, and resulting in massive over-extended debt which just kills when the bubble pops.

That's a theory, about a possible cause.

Another theory, supported by compelling evidence, is the law of supply and demand.

Regardless of which theory one subscribes to, the general is one thing the specific another. If everyone knew that property was overvalued, then it wouldn't actually be overvalued after all. It's one thing to acknowledge that free markets overshoot (in both directions), it's another to pinpoint exactly when and where markets have in fact done so and by how much. Anyone who has that ability can make themselves a lot of money in short order - which in turn will help the market correct itself!

What I described is a supply&demand driven process. The demand is grossly distorted by easy credit/low interest rates. In 2008, this was brought on by innovations in derivative products, the collusion of credit rating companies, and a decision by banksters they could nearly completely ignore loan qualification assessment since the mortgages could be bundled into these derivatives with the risks hidden. But it's still supply and demand that drives the unsustainable pricing that is the bubble.

Thommo wrote:Ok, checked the FTSE price, it's 5,960.97, making the 20% drop target for the index 4,768.78 or less.

Update on these prices:-

FTSE: 5,950.23. Barrel of oil £21.44.

TEN MORE POUNDS YOU CAN DO IT

It's all on the line here. If they both let you down you're out £10. Not $10, but £10. Just let that sink in for a moment.

You might have to donate to charity. Or I might. But let's not dwell on me.

Thommo wrote:
crank wrote:
The cause of these types of bubbles is too much money/too easy credit, lowering interest rates resulting in speculation run amok. Prices keep going up and that gives current assets ever more leverage, and resulting in massive over-extended debt which just kills when the bubble pops.


That's a theory, about a possible cause.

Another theory, supported by compelling evidence, is the law of supply and demand.

Regardless of which theory one subscribes to, the general is one thing the specific another. If everyone knew that property was overvalued, then it wouldn't actually be overvalued after all. It's one thing to acknowledge that free markets overshoot (in both directions), it's another to pinpoint exactly when and where markets have in fact done so and by how much. Anyone who has that ability can make themselves a lot of money in short order - which in turn will help the market correct itself!

What I described is a supply&demand driven process. The demand is grossly distorted by easy credit/low interest rates. In 2008, this was brought on by innovations in derivative products, the collusion of credit rating companies, and a decision by banksters they could nearly completely ignore loan qualification assessment since the mortgages could be bundled into these derivatives with the risks hidden. But it's still supply and demand that drives the unsustainable pricing that is the bubble.

Guys.....when a bank is allowed to lend out 30 times it's capital base...what the fuck do you think will happen.

It's like you renting your house out 30 times....same house - 30 different renters all at once and despite being allowed to do that they still fucked up.

The underlying root of it is unchecked predation and the unwillingness of sovereign powers to reign it in as they often are in collusion - implicitly or explicitly ( oh look - housing prices are up, our shire taxes will increase, lets build a $3 million town hall.....whatcha mean we're only a town of 1,000 WE'LL GROW!!!!! ( see Iceland ).

We do not allow speculation on roads, parks, water supplies, museums, hospitals ( in civilized nations at least ), armed forces but we allow predation on shelter.

If there was a 20-30% stock of community or coop owned rent regulated housing with the rent based on a 30 year amortization cost and also means controlled....then that would act as a damper on speculation as well. Geared to 30% of family income then the house would be valued at a future cashflow assessment instead of "today" or next year current market evaluation.
There are many funds, retirement notably that would be happy to hold paper like that and a smart gov woutl work that out to match shelter with cash flow from renters or even buyers ( with the proviso you cannot flip it for 10 years ).
One of the companies in BC got fed up with staff not having affordable housing so they built some ....sold to employees but they
a) have to work for Whistler
b) cannot sell it for more than what was paid for it

Smart large corporation always had affordable housing for workers in mind...some still do.....but it's the cities that need to take control and the tax man.

Spain built thousands upon thousands of houses - more than half did not sell and you can bet they are still on the books at $150k each even tho they would not liquidate for anything near that.

Why not write them down .....because that would take $30 million out of allowable lending for every million in write down ....effectively a margin call...exactly what happened in 2008 ....and the tax papers got reamed bailing them out.

It has happened again - no action was taken.....except perhaps in Iceland ...at least there politicians and bankers went to jail.

In Sweden ...a few banks were going under....the gov took them over, fired management and told shareholders to suck eggs - rebuilt them and then sold them off.

This is what happens when predators in critical industries ( power generation in this case ) are allowed to go unchecked.

In Exchange For Cutting Benefits, This Bankrupt Coal Company Agreed To Pay Executives Millions
BY NICOLE GENTILE - GUEST CONTRIBUTOR FEB 16, 2016 10:53 AM
CREDIT: AP PHOTO/DAVID GOLDMAN, FILE
In this Oct. 15, 2014 photo, coal miners return on a buggy after working a shift underground at the Perkins Branch Coal Mine in Cumberland, KY.
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A bankrupt coal company last month unveiled a plan to pay top executives up to $11.9 million in bonuses over six months as an apparent reward for slashing benefits for workers and dodging environmental clean-up obligations during bankruptcy proceedings. The company, Alpha Natural Resources, is one of the four largest coal companies in the U.S. and filed for bankruptcy last year.
Seven executives and eight other employees who remain unnamed in court documents are eligible for the bonus if they hit certain metrics for cutting costs while protecting the company’s cash reserves. Top executives were already promised $2 million retention bonuses for staying with the company through August 2016. These bonuses are described by Alpha as incentives to ensure high-level performance, something that is apparently not covered by annual salaries. In 2014, as the company was evidently on the verge of financial collapse, Alpha paid CEO Kevin Crutchfield nearly $8 million, and former President Paul Vinning more than $4.5 billion.
The plan to dole out millions of dollars to the same executives that bankrupted the company is the latest in a series of controversial steps taken by the industry giant. Late last year, Alpha also proposed to eliminate health insurance, disability, and other benefits for mine workers. According to court documents, this move would affect more than 4,500 disabled former employees, non-union retirees, and their families.
The cuts, aimed at curtailing expenses and restructuring debt as the company looks to emerge from bankruptcy, would save Alpha about $3 million annually. They also put the company’s balance sheets ahead of its workers.
“I can’t imagine anyone trusting them,” Clarence Bishop, a maintenance manager at an Alpha mine in Wyoming for 13 years, told the Casper Star Tribune.
Alpha is not alone in its attempts to shirk its responsibility to retired and disabled mine workers. Last year, Patriot Coal Corporation — a spinoff of Peabody Energy Company’s coal assets in the Appalachian region — filed for chapter 11 protections, just 18 months after emerging from bankruptcy.
Patriot has been criticized as “designed to fail” and as a way for Peabody, the largest U.S. coal producer, to dodge its obligation to retirees and disabled workers. Patriot acquired responsibility for thousands of retired mine workers’ benefits just two years before its first chapter 11 filing. The current bankruptcy proceedings are poised to leave mine workers with none of the benefits they were promised.
“It’s rather extraordinary,” Robert Bruno, director of the University of Illinois-Chicago’s School of Employer-Labor Relations told the New Republic. “It’s just a more elaborate attempt to detach the employer from any kind of legacy obligations for their employees, a further abdication, or departure, from the post-war era’s contract in which employers bore some responsibility…Now that model of providing some level of social insurance has been torn asunder, and the burdens have been handed to the individual worker.”
Last month Arch Coal, the second largest coal producer in the U.S., also filed for bankruptcy. Similar to Alpha and Peabody, Arch also offloaded its retiree obligations to Magnum Coal, which was later acquired by Patriot.
Mine workers, while affected most egregiously, are not the only ones harmed by Alpha’s bankruptcy. In a deal struck with the state of Wyoming, the company committed to only $61 million of the $411 million in reclamation liabilities from its mining operations. This leaves $350 million in unsecured reclamation costs, and that could fall to taxpayers.

http://thinkprogress.org/climate/2016/0 ... -payments/

Enron all over again

Capitalism does not need to be predatory .....it does need to have controls placed where competition alone or vital resources are in play.

Affordable shelter, it would seem to me.....is a vital resource....one reason the soldiers were supplied when they returned from WWII......it is absolutely critical to a functioning and fair society that affordable housing be available and market forces will NEVER supply that.

Cities need affordable labour to make them run, healthcare workers, sanitation workers the list is endless and when housing gets unaffordable wage demands and strikes abound, family violence jumps, kids feel there is no future for them

Hell - girls in Uni in Canadian cities are turning to sugar daddies to get out of debt.

http://www.thestar.com/news/canada/2016 ... eitel.html

Immigrants end up four families to a house designed for one....so parking becomes impossible...

Australia faces a similar situation

Without affordable housing, we won’t have a society worth living in

Home ownership, the Australian Dream, is becoming a fading hope for those without an existing foothold in the market. For increasing numbers of younger Australians, the dream will give way to a future as tenants. This will have far-reaching negative impacts on how people live together in both the inner city and the suburbs unless housing, planning and investment policies come to terms with this shift.

Robert Menzies’ Australian Dream of home ownership is beyond the reach of increasing numbers of young Australians. This is due to a multitude of factors, including the tax treatment of property and our attractiveness as a haven for foreign investment. If we are to become a “nation of renters”, how are our cities equipped to deal with this?

Changing the way we live

The inner cities of our capitals are seeing the results of the “compact city” growth model. According to this model, former industrial sites are being re-purposed for high-density residential developments. These developments are heavily marketed to overseas and domestic investors and are already disproportionately occupied by renters – 60-70% in the three biggest capitals. These renters tend to be young professionals or international students, affluent, without families and with high occupancy turnover.

These apartment developments are high-security and impersonal. Inner-city developments tend to be expensive privatised fortresses creating barren “anti-neighbourhoods”, which are unattractive to those wishing to rent over the course of their lives. Little attention is given to a strong public realm where a diversity of lifestyles, age groups, ethnicities and economic statuses can interact daily on vibrant, activated streets with adequate local green spaces.


Property development in inner cities is focused on profits, not good social planning. from http://www.shutterstock.com
Without a strong independent planning vision from local authorities, developers will continue to build according to this same model in the belief it provides the highest return on investment. The prospects for change are not encouraging.
May 28, 2015 10.59am AEST

Britain in my view is in the worst position - with rampant speculation and not the kind of available land that the US, Canada and Australia have...

Britain’s housing crisis is a human disaster. Here are 10 ways to solve it
Rising house prices have been willed by public policy over decades. The fallout for families, communities and business has been severe
“Every day I cry,” says an activist on a stall in Stratford, east London, that is shared by housing campaign Focus E15 and the Revolutionary Communist Group. “How many thousands of people are suffering?”

Mark Carney, governor of the Bank of England, has said that problems with housing are the “biggest risk” to the UK economy. The CBI agreed, saying: “A perfect storm is brewing in the housing market. Now is the time for action.”

If there is one thing that revolutionary communists and bankers can agree on, it is that there is a housing crisis in Britain. There are too few homes, usually costing too much, often in the wrong places, and often of poor quality. The crisis damages lives, breaks up families, blights employment prospects, reduces mobility and slows the economy.

This, you would have thought, would be a gift for any political party. Housing is a matter of vital importance to voters. At a time when all parties struggle to offer alternatives to each other, this would be an opportunity to be distinctive and take the lead. Yet all the main parties’ offerings on the subject are piecemeal, gestural and unambitious.

http://www.theguardian.com/society/2015 ... l-election

waiting lists in Toronto tor affordable housing units ( we have a few remaining ) are sometimes 14 years.

Neglect, large scale collusion, failure to exercise sovereign power and eminent domain, politicians that have forgotten what Pulic Weal and public service means.....financial institutions exercising multiplication of capital privileges granted by society to control money supply ( a worth goal when exercised properly ) to feather their own nests and that of their speculator buddies.

Sweden, Denmark and Holland where 20-40 per cent of housing is public rental.

This is the good balance

This is the problem in a ntushell

Since the late 1970s a gradual adaptation to the market-economy has led to an almost completely deregulated housing market with no significant social goals. The cost of renting or buying has exploded to exorbitant levels in areas under pressure, resulting in increasing numbers being marginalized simply because they cannot afford to live there. In Oslo there is a housing crisis with people moving into the city while no new housing is being built.

Who is most at risk? The elderly, living on minimum pensions, single parents, the unemployed, the disabled, students, young people, immigrants and refugees (who face an extra struggle against racial discrimination) and others in the low-income bracket. If the situation does not change Norway can only expect an increase in the numbers who cannot find affordable accommodation - as has already happened in many other European countries.

An interesting fact of homelessness in Norway is that about 9 per cent do not abuse drugs or alcohol, have no mental illness and have never lived in institutions. Who are they, and how is it that they have fallen into the homeless trap?

more here
http://www.share-international.org/arch ... Norway.htm

Almost a decade later a few sods get compensated...

http://www.reuters.com/article/us-austr ... SKCN0VT04T

Millennials thinking small for affordable housing
Rising housing prices and culture shift causing Generation Y to seek new types of housing
By Joseph Quigley, CBC News Posted: Feb 21, 2016 11:00 AM ET Last Updated: Feb 21, 2016 11:00 AM ET


The "Getaway" tiny house projects gives people a chance to taste what living simpler means, says Pete Davis, the co-founder of the project. (Charles Krupa/Associated Press)

Average house price in Canada up 17% in January to $470,297

Harvard law student Pete Davis says he wants to live in his own tiny house someday. In the meantime, getting a taste of the lifestyle now — by offering it to others — has been an unexpectedly successful venture for him.

Davis is the co-founder of Getaway, a project that rents out tiny houses in the woods around Boston, Mass., for people seeking a retreat, or for those who want to test if tiny house living could work for them on a more permanent basis.

Tiny housing a growing trend in Canadian real estate
Average house price in Canada up 17% in January to $470,297

The project is one of many small housing initiatives in what amounts to a growing industry in millennial housing, particularly as rising real estate costs in both Canada and the U.S. have made traditional home buying much less affordable.

The tiny house movement, which has seen entire tiny villages spring up in Oregon and Texas in recent years, is working to fill that niche, and was the inspiration for Getaway.

Tiny House Tryouts
The kitchen and bath area of one of the homes in the "Getaway" project. Davis says downsizing living space to get in touch with the world around you has a lot of appeal. (Charles Krupa/Associated Press)


Davis said the appeal of tiny housing is in the shifting priorities of millennials, those in their 20s and early 30s, who seek humbler existences.

"I think it's because there's been a transition in lifestyle of what people think the American dream is," he said. "The idea of the nineties over-consumption — of showing off all the stuff you have and getting the big screen TV — has changed to the desire for more authentic experiences."
Communal living


A layout for Commonspace, a coliving apartment in downtown Syracuse, N.Y. Though units are small, co-founder Troy Evans says the community atmosphere appeals to people.

Another small housing idea that's gaining traction in the U.S. is the idea of expanding dorm-style living into post-university adulthood.

Commonspace, a real estate venture situated in downtown Syracuse, N.Y., is selling the idea of living in a tiny apartment that is part of an active community. Set to open in May, the project will see residents live in small, 300-square-foot micro-units with larger shared areas like kitchens and relaxation areas.

Troy Evans, one of the co-founders of Commonspace, says the idea is about providing residents with both a community atmosphere and a private space.

"It's a very warm and welcome space. It's not like you're going to be unhappy when you're in your private space," he said. "We'll give you that and a combination of public space — so trying to create that perfect balance."

Evans noted the space has received a lot of interest, and affordability is a big selling point.

Units in Commonspace rent for $750 to $900 per month, compared to the $1,100 price range of other single-bedroom apartments in downtown Syracuse.

Evans expects the communal living idea — which has already taken root in New York City and San Francisco — will continue to gain traction.

"I think you're going to start seeing them pop up everywhere," said Evans. "I think other people — they're going to try it just like we are."

more
http://www.cbc.ca/news/business/millenn ... -1.3444095

I wondered when this would finally start to get traction

It is happening here. Various empty offices are being turned at one level as student living while on another level small units are being created for couples and singles which can be occupied after further education.

There is one 1960's office just down the road from me going to be refurnished. It is across the road from the polytech.

I don't have a problem with density increase ...I have a problem with cities not allocating for affordable housing....viewing shelter the way roads are viewed.....as essential.

Surprise overview of Australia in a paper I would not normally expect to see it in......crazy scary

Jonathan Tepper, a UK based economist and founder of research house Variant Perception, is convinced Australia is in the midst of "one of the biggest housing bubbles in history".
The Australian Financial Review reports about how he and local hedge fund manager John Hempton scoped out the apparent epicenter of this bubble, Sydney's western suburbs, and walked away thinking it was even worse than they'd originally thought. It's a fascinating story.
In a subsequent report to clients, obtained by Fairfax Media, Tepper uses the following charts to support his thesis.

"Australia is the only country we know of where middle-class houses are auctioned like paintings." Photo: Fiona Morris
'Australia is simply in a league of its own when it comes to mortgage lending.'

And a rising share of these mortgages are 'interest only' loans

"The Australian housing bubble could not have become as ridiculous as it is without the help of easy financing," he writes.
"Over the past few years, over 40 per cent of all new mortgages originated have been interest-only mortgages.

"This is truly Ponzi financing, where home buyers only make money if their houses keep rising in value," he writes, later describing interest only loans as a "disaster waiting to happen."

Read more: http://www.theage.com.au/business/the-e ... z413wz11vn
Follow us: @theage on Twitter | theageAustralia on Facebook

I thought Canada was bad....

"It is very difficult for a foreigner to understand just how crazy the Australian housing bubble is." he writes.

then there are the outliers...

Kitsilano home sells for $735,000 over asking price, sets new record (PHOTOS)
BY
LAUREN SUNDSTROM
11:59 AM PST, WED FEBRUARY 24, 2016

Kitsilano real estate records were broken on Tuesday after a home sold for $735,000 over the asking price of $3.5 million.

Now one might think one is getting a serious house.....nah...



serious lot perhaps??....

not even...

The house at 3555 West 1st Avenue was built in 1912, is 3,400 square feet and sits on a standard 33 x 120 foot lot without a view. The selling price of $4.23 million is about $1.6 million above the lot’s assessed property value.

seriously stupid??

indubitably....

Bit late....

Two-thirds of Canadians in poll think government should intervene in housing market
Most Canadians in poll said house prices are too high where they are, even outside Toronto and Vancouver

http://www.cbc.ca/news/business/angus-r ... -1.3465574

this in particular....predatory

Earlier this month, a practice known as "shadow flipping" has come under fire. Essentially, by taking advantage of a clause in standard real estate contracts known as an "assignment clause," some realtors been generating huge commissions by flipping properties between a number of buyers until the ultimate sale is booked.

Critics say that abuses a system that was originally designed to protect sellers in the event of a buyer backing out by merely adding to the speculation by driving up prices multiple times during a single sales transaction.

Respondents to the Angus Reid poll were solidly against the practice, with 65 per cent of them saying shadow flipping is "unacceptable." That was especially true among respondents from B.C., where shadow flipping has become prevalent according to recent media reports. And older Canadians were also more likely to be against the practice than younger Canadians were.

Why are the prices so high? I realize that's a stupid question, but still. Mrs. Lak watches those flipping TV shows, a couple of them are based in Canada. The prices are absurd, completely OTT.

Is it a supply and demand situation? Just too many people chasing too few homes? If so, what is stopping developers from building tens of thousands of new units? Is there some other basic structural difference between the U.S. and Oz or Canadian markets?

We burst our bubble in 2008, and are slowly recovering. Prices are supposedly back to 2006 levels but I see no evidence of that. Our house certainly isn't, and neither are our rental properties. If they were you can bet your ass I'd be selling. The most absurd case I saw was an investor buying a single lot (no building) on Dog Island, sight unseen, for $750,000 in 2006. Dog is about as isolated as you can get on the Gulf coast, no bridge to the island, no stores, no cable TV, no internet except cell phone. 3/4 of a mil without looking at the property. Then the crash. The property finally sold last year for $35,000. Talk about taking a bath, eh?

Boyle wrote:TEN MORE POUNDS YOU CAN DO IT

http://www.bloomberg.com/news/articles/ ... o-far-away

With Brent futures having bounced back as high as $41 a barrel, the International Energy Agency sees “light at the end of the tunnel,” and Goldman Sachs Group Inc. is spotting “green shoots.” Even so, many analysts warn that, like the failed rally last year, this recovery will sputter once prices go high enough to keep U.S. crude flowing.

https://uk.finance.yahoo.com/q?s=^FTSE

6,147.

Good news I reckon.

Commodities entered a bull market on Monday, ending a five-year rout, as supply constraints drive up prices in everything from soybeans to zinc, and help the asset class outperform bonds, currencies and equities so far in 2016. The Bloomberg Commodity Index, which tracks returns from 22 raw materials, closed 21 percent above its low on Jan. 20, meeting the common definition of a bull market. The index is still down about 50 percent from its high reached in 2011.

http://www.bloomberg.com/news/articles/2016-06-06/commodities-enter-bull-market-ending-five-year-selloff-chart

Thommo wrote:

Boyle wrote:TEN MORE POUNDS YOU CAN DO IT

http://www.bloomberg.com/news/articles/ ... o-far-away

With Brent futures having bounced back as high as $41 a barrel, the International Energy Agency sees “light at the end of the tunnel,” and Goldman Sachs Group Inc. is spotting “green shoots.” Even so, many analysts warn that, like the failed rally last year, this recovery will sputter once prices go high enough to keep U.S. crude flowing.

https://uk.finance.yahoo.com/q?s=^FTSE

6,147.

Dislike.

Deserved. But you lose half a point for taking months to notice.

I have to say at this point, which is about a half way mark in our year bet, you look like you're going to owe a few bucks to charity. I think I may indulge in a small gloat and pontificate (with myself, I am alone, which often makes for the best, most self-indulgent pontificating after all) about which charity I may nominate for your donation.

I have international red cross and cancer research in mind at the moment. But I'm also mulling over looking into something topical like disease control.

Hey, I'm glad I noticed. I haven't been paying attention to the thread. Part of the reason I made the bet, too, is because I know the money'll actually go to a good place.

I prefer cancer research as I've young family that went through cancer, but the others are pretty good too.