Delusion

snow hope · Post by **snow hope** » 19 Apr 2007, 12:05

Maybe I am just getting old and cynical

but I keep reading news articles and thinking to myself the world is either intentionally or unconsciously deluding themselves. I will give you a couple of todays examples from one BBC news article.

"Dow Jones hits all-time high

(snip) It looks to me the sub-prime thing is fairly well contained and the financials are due for a rally," said Stephen Massocca, co-chief executive of San Francisco-based investment bank Pacific Growth Equities.

my view - Don't bet on it - house prices I would suggest have an awful lot further to drop in the US (and then the UK), the problem has hardly even started to hit and will cause much greater problems over the coming months/years.

(snip) Core inflation, which excludes volatile energy and food costs, rose by just 0.1% in March, down from 0.2% in February, and 0.3% in January.

my view - LOL - unbelievable - excluding volatile energy and food costs! What have they included? DVD players and LCD TVs???

http://newsvote.bbc.co.uk/1/hi/business/6570111.stm

Does anyone else see the delusion or am I just going mad?

Billhook · Post by **Billhook** » 19 Apr 2007, 12:23

No, you not going mad - if anything the reverse is true -

those who really question where this society is going start to transcend the officially promoted insanity of a neurotic decadence and inability to address actual problems,
with the subconscious anxiety this conditioning creates being focussed instead onto the requisite bogeymen
such as Osama & the Terrorist Hordes.

In fact I suspect that you may well be saner than I

(since I'm having to learn more about farming
while also trying to manage several hundred creatures of diverse sorts and foibles
and it hasn't rained for about 6 weeks . . . )

Regards,

Bill

isenhand · Post by **isenhand** » 19 Apr 2007, 12:45

snow hope wrote:Maybe I am just getting old and cynical

Getting? I always thought you were there

snow hope wrote: Does anyone else see the delusion

Nope, its not a delusion. It all to do with how people live their little lives. People have more concern for their day to day interactions than they do for the big picture. People also predict the future on the basis of the past. So, you have everything look ok around me and it was all ok yesterday so, therefore, things will just go on as the always do.

snow hope wrote: or am I just going mad?

As the majority define madness to have a view contrary to the majority means you fit the definition for mad. Welcome to the club.

GD · Post by GD » 19 Apr 2007, 12:50

When we remember we are all mad, the mysteries disappear and life stands explained. - Mark Twain

mocara · Post by **mocara** » 19 Apr 2007, 22:02

snow hope wrote:...
my view - Don't bet on it - house prices I would suggest have an awful lot further to drop in the US (and then the UK), the problem has hardly even started to hit and will cause much greater problems over the coming months/years....

Never mind the UK as a whole, what about N.I. ? Prices getting up to the same level as the South East. Where is this money coming from? N.I. is as productive as a (metaphors fail me). Sadly, I see N.I. suffering badly from a house price crash, just when things were starting to look up.

biffvernon · Post by **biffvernon** » 19 Apr 2007, 22:13

Perhaps a simile, rather than a metaphor, is what you are at a loss for?

House prices go up when folk decide they don't want to live in the same building as others. To get a house price crash people have got to start putting up with each other again.

Pippa · Post by **Pippa** » 20 Apr 2007, 10:17

When you can make no sense of the nonsense you have to make your own sense!!!!!

My daughter decided to change my screen saver the other day and I'm much happier now

.

Such a small thing which had no agenda other than my daughter liking the picture of her brother and her (I like it as well).

You can't really see from this picture but they are really laughing hard. It makes me feel happy each time I look at the screen. Maybe you should try it?

snow hope · Post by **snow hope** » 20 Apr 2007, 10:23

Two great kids!

I think I will try it.

Post by **clv101** » 20 Apr 2007, 10:28

biffvernon wrote:House prices go up when folk decide they don't want to live in the same building as others. To get a house price crash people have got to start putting up with each other again.

House prices go up when the money supply increases allowing people to pay more - without increasing money supply house prices can't rise, even if people decide they don't want to live in the same building as others. The house price crash comes when folk are no longer able to afford the "luxury" of living on their own.

I think the behaviour angle is overplayed, money supply is more important.

caspian · Post by **caspian** » 20 Apr 2007, 12:52

clv101 wrote:House prices go up when the money supply increases allowing people to pay more

Is there an oversupply of money in the economy though? And if so, why?

Post by **clv101** » 20 Apr 2007, 13:03

caspian wrote:
clv101 wrote:House prices go up when the money supply increases allowing people to pay more
Is there an oversupply of money in the economy though? And if so, why?

I depends what you mean by oversupply but there is certainly more money in the economy as a direct result of globally low interest rates.

biffvernon · Post by **biffvernon** » 20 Apr 2007, 13:44

People do have some discretion over whether to spend on houses or on food or whatever. The French, for example, have always spent a greater proportion of their income on food and less on housing than the Brits. They are more prepared to bid up the price of cheese than of housing, living with mother-in-law being preferable to doing without good cheese.

A complicating factor is that housing is seen as a positional good. The size of our island and its planning laws, which seek to keep the countryside pretty, conspire to limit the amount of housing available no matter what the price. This doesn't apply so strongly in, for example, the USA where spaced out suburbia known no bounds. (Yet.)

oilslick · Post by **oilslick** » 20 Apr 2007, 21:01

biffvernon wrote:A complicating factor is that housing is seen as a positional good. The size of our island and its planning laws, which seek to keep the countryside pretty, conspire to limit the amount of housing available no matter what the price. This doesn't apply so strongly in, for example, the USA where spaced out suburbia known no bounds. (Yet.)

I just don't buy that argument at all any more - are people out on the streets? Are rents going up at the same rate as house prices? Are there not half a million or more houses just on Rightmove? (I've not checked that btw, might be more, might be less but it's a lot!). Are there not something like 1 million empty houses?

As clv101 said this is completely about a) banks relaxing lending standards to keep the whole party going and b) the perception prices will go up.

Take away either of those and you're in trouble. It could well happen that both go wrong (or right depending on your view point) together so buckle up - could be an interesting ride!

biffvernon · Post by **biffvernon** » 21 Apr 2007, 07:21

I said it was a complicating factor, not the whole story. Houses are a positional good. There is a fixed supply in Hampstead and that position is seen as desirable so prices are maybe ten or twenty times as great as in some part of Hull for the same quantity of bricks and land area. The million empty houses are more likely to be in Hull than in Hampstead.

bigjim · Post by **bigjim** » 21 Apr 2007, 22:18

Apparently some people prefer to buy property and just sit on it and wait for it to appreciate in value- far better than trying to let it out to some smelly tenants

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