It is Obvious

Chris Rick has got altogether too much to say

Archive for April, 2012

Irene Shortall

Posted by chrisrick13 on April 30, 2012

It is obvious: I’m right

Irene was born within a few days of me over a hundred miles away.  She is a bloody southerner.

We met when I was 29.  Her son the same age as my daughter and they lived in the same courtyard.

Roll forward 33 years and this morning she was babysitting for her son, who was away for the weekend to celebrate his birthday, when she had a stroke that has paralysed fully half her body.

You can’t take it with you.  Do not spend even 30 seconds doing things you do not want to do.  Question your reasons for doing anything.

It is obvious: I’m right at least in this.


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Another week

Posted by chrisrick13 on April 29, 2012

It is obvious: life goes on

I have been telling the story of my wife when I go to bed at night.  Now that analogue tv has gone and the small one in my bedroom is about to make it to the tip I go to bed with a book.  Something I have not done for far too long.  As I am working at the moment I go to bed early.  My wife is made of sterner stuff and usually come up the stairs some time after me.  She gets undressed as I lie there with my nose in a book.  I am in trouble as I have failed to look while a gorgeous woman is standing in front of me getting undressed.  Sometimes I put the book down and watch to be shouted at to stop looking at her as she is too old/too fat/too ugly.  I have taken to checking first whether it is a look or a don’t look night.

This morning she heard the Roman Catholic Bishop of Edinburgh saying that Cameron was ‘out of touch’.  It showed pictures of a man in a tall pointy gold hat, wearing a long white dress with gold braiding, carrying a gold shepherd’s staff standing outside a 1000 year old building while people kissed his hand.  I think that one of the ways to sanity is to spend a lot of time with people who have diametrically opposed views to you as it gives you a reality check and when you agree there is something to think about.

I spent much of yesterday clearing out my garage.  I have long said that there was no need to go to Iraq to find chemical weapons of mass destruction.  I have a bigger store in my garage than  Saddam ever had.  My house is much of a mess as we emptied our loft into the house some while ago ready for a move.  I am owned by my possessions and cannot find the strength to get rid of stuff.  However when you have to continually move boxes around to get things and just move around the house you eventually start to hate the objects enough to actually throw them out.  So I will put my nuclear and biological suit on and take the chemicals and some newly hated items to the tip.

We lost one of our hives on Friday.  There has been so much rain that they were unable to go out to get food.  They starved.  They are only loan bees so I alerted the owner and they came round and managed to save the queen and put food into all the hives.  All my apple trees are losing their blossom and there is nothing out there to pollinate them.  So cider looks unlikely this year.  I planted 250 onion sets two weeks ago into bone dry soil.  It is, as I look at the moment, a lake.  So they stand no chance  You are at the mercy of the elements  The human race might do well to remember that.

It is obvious: life goes on until it doesn’t

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Recession! I see no recession.

Posted by chrisrick13 on April 26, 2012

It is obvious: we are all stupid

0.2% is well within the error rate of the sample.  The GDP should be quoted as -0.2% +/- 1%.  We could easily not be in recession.  Ah! we aren’t, we are only technically in recession.  Today I heard that we were ‘formally back in recession’.  I still have trouble with this even though it does not matter.

The rate of change of the economy is low, but not especially so.  It is moving to a narrower range around zero.  This is not a bad thing.  Continued growth is not possible so moving our economy to one of low growth is inevitable and desired.   Get used to it.  Our problem remains one of paying the debt that was run up during the periods of growth.  Inflation will take care of that.  The war bonds that UK issued and did not repay, but do keep paying interest on, still exist.  The huge debt that the British people took on, the national scandal is still there.  It was a massive amount of money…£350m!  They do trade at much less than par as their interest rate is so low.  A market like everything else.  There is no incentive, but the government could redeem them at any time – just trim India’s foreign aid by 30% one year.  So it is with our current debt: as long as we service it and chip away at it then we will get decent interest rates and be allowed to keep borrowing to roll-over the loans.  In 30 years the money will seem small as we will be talking economics in trillions.

(Note that the £100 war bond was worth about £3000 in today’s terms when it was bought…or £10bn.  They trade at about £80 at the moment.  So at least the government has not entered the moral hazard of buying them on the open market and simply cancelling them for £280m.)

I will note that the coalition government are handling this very badly.  At this rate the blame will be on them and not with Labour.  Another bought of Labour borrow and spend will sink this country.  What bothers me is that anyone can think that the Labour plan, if indeed there is one, will actually achieve anything.  It is not a matter of adopting a strategy that with a single bound will free us.  There is a lot of pain that has to be endured and it is a matter of a strategy that will eventually move the country to a sustainable path with the mimimum pain or better expressed as the smallest value for pain multiplied by the period it is endured.  Something that hurts a lot and is done in a year might be a lot better than a nagging ache for 20 years.

So does it matter that we are in a recession?  Technically – no.

It is obvious: we are all stupid yet individually there are some who are not

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Bad news

Posted by chrisrick13 on April 26, 2012

It is obvious: there is a silver lining to every cloud

I’m trying to lose weight.  At the moment with reduced exercise I am trying to eat a little bit less than before, and the ‘before’ was reduced anyway.  I sit and listen to my stomach screaming.  If men are living longer through healthier habits they can stuff it really.  It is the old joke: you might not live forever – it will seem like it though.

So I might ask if you have noticed that when you drop a slice of bread it always, perversely, lands butter-side down.  Except there is no butter in my house.  Actually there isn’t any bread.  Have you noticed how inventive you can be when there is no ready-to-eat food in your house?  I think that the landing is related to friction and density, both changed by the butter.  So for every event there is a reason even if it you can’t think of it.  There are also consquences.  Not that it ever happens to me, but I might eat bread after a visit to the floor butter side up but not v-v.

Today we are now in a technical recession.  This is another one of my word definitions: technical.  It means nothing.  I cannot think of any difference between a recession and a technical recession.  I cannot think of any difference between a door and a technical door.  It is  either a door or it isn’t.  There are certain requirements for something to qualify as a door.  An object cannot be a door just because you define it as such.  All you are doing is confusingly using a word (door) to refer to two different things.  There is an implication that a technical recession is not really a recession.  It jolly well is.

The BBC were at pains to say that the GDP movement was the first pass estimate based on 40% of the data.  They omitted to say that few revisions are upwards.  However the numbers for GDP are revised for many months after they first appear.  Indeed a big revision downwards for the last quarter could turn this quarter into an increase.  The problem remains that they can revise all they like, the effects felt last quarter will never change: they are a part of history.

I am now amused at the GDP predictions for this year.  Time for a revision.  Indeed my predicition was lower than any that I had read.  I wonder now if I should be reducing it.  Keep an eye out for revised GDP predictions.  The OBR (Office for Budget Responsibility)
has 0.8 at the moment.  Apply Rick’s law and it is close to my prediction.  The central line on the BoE fan chart is about 1% and I notice that even the feint bits of the fan that are the least likely only just dip below the zero line.  Is that what we do with these fan charts: just follow the bottom line of the fan?

Depending on Mervyn’s definition of zig-zag (and he should have been asked) then it didn’t zag this time.  We have been prepared for a drop next quarter to sober us up after the good news this quarter – hah.  An extra day off will reduce GDP yet there was no mention of the extra day in the quarter just gone which will increase and therefore flatter the number we just had.  So another quarter of reduction is certain.  Is this still a zig-zag?  It will be eventually.  Suppose that it is also a reduction of the same order, then half-way through the year we will be down 0.4%.  do you see any reason for the number to get better for the rest of the year?  I do not.  We could easily have a year of (technical) recession.  Given my stance on growth I ought to be happy.

What of the consequences?  Alas I see no increase in interest rates.  I also see that more QE might now be considered by the MPC.  We need a parallel universe.  There are those who point out how bad it would have been without QE and those who say not to keep doing something that has obviously not worked.  I am in the camp who say that with all the risks of QE there have not been enough obvious benefits to make the experiment worth continuing.  I will ask Shaun Edwards’ question: how do you wind out of it?  I need not really bother as the ‘when’question probably is too far away to bother me.

Don’t forget that the majority of actions by governments, central banks and NGO’s (IMF, ECB, EU, IMF, WB) are based on clearing up everything when growth returns.  It is not going to.

It is obvious: there is a silver lining to every cloud and inside that a whole load more cloud

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The oldest profession

Posted by chrisrick13 on April 21, 2012

It is obvious: there are some very simple questions out there

I have been asked to explain ‘The Prostitutes Question’.  It is a subtle (though crude) joke that can help our thinking a lot of the time:

A man goes up to a woman in a bar and asks her if she will spend the night with him for £1m.  She sits, stunned for a moment or two and eventually replies that she will.  He then asks if she will spend the night with him for £5.  She indignantly asks him:  What do you think I am?  His response is that he thought they had already established that.

The mechanism is more interesting and really applies to markets.  Can I sell my house tomorrow for £1m?  The answer is an emphatic ‘No’.  Can I sell it for £5?  This gets an equally emphatic ‘Yes’.  I now know that there is a price in that range that once set reduces the buyers to a count of 1.  Having found that price I have a simple decision to make.

So it is with just about anything.  I can move the price down to get a quicker sale.  I can move it up if I want to gaze at a picture of my house in the estate agent’s window for an extended period.

Of course the reverse applies in a rising market.  As time goes by the number of people prepared to pay a given price rises with time.  The only way to ensure that a house is yours is to make an offer that is sufficiently high that during the period between your offer and contract signing the price will not have risen enough for more potential buyers to arrive…or to deal with someone with principles.  Another solution would be to shorten the buying time or to make offers binding on a certain date.

Just to (re)make the point I would like to briefly (re)consider a few prostitutes questions that we ought to have in our minds.

1) China is growing at 8% a year and will double in 9 years if nothing changes.  It will consume in those 9 years the same amount as it has consumed over all previous history.  It won’t manage that, trust me.  So what will it manage?  What will be the result?  What actions might it take as it fails to manage that growth?

2) Over the last 30 years the average increase in oil consumption has been 1.7% so in 41 years we will be using double what we do today and will have consumed more in those 41 years than has been consumed in all of previous history.  Where will all that oil come from?  How will it be processed?  Where will we keep all the cars that use that oil?  Where will we drive them?  Where will the steel come from to make them?  When will the oil run out?  What will we do then?

3) The world population growth rate is a smidgen over 1% and (thankfully) dropping.  World population will double in 70 years.  No it won’t, something will happen.  Interestingly Vatican City has a zero growth rate and the UK is at 0.56%.  Possibly the nicest place with a negative growth rate is the Virgin Islands.  Japan has a negative growth rate.  Negative growth rates imply an ageing population with all the problems that entails.  If we take the desired rate of growth of GDP in the UK of 2% then we double everything in 35 years.  Yet our population doubles in 110 years.  What happens in the gap as one is predicated on the other?  How will the adjustment occur?

However the question has a much more local effect.  What happens if I save money and make 6.2% after tax?  Provided I do it consistently over time I will be able to buy the same amount of stuff that I could have bought with it today.  If it is something that is durable then I ought to buy it as soon as I can and use it now rather than waiting while trying to get my money to increase at something like 10% a year.  (Trot down to your bank and see what you can get after tax.)  Trouble is, I can’t do that for food or health care.  I also cannot account for spikes in inflation due to trigger events.

So you should have prostitutes in your mind all the time.  Failing that keep asking people who pontificate (like me) the prostitutes question, or at least formulate it in your mind and see where it takes you.

It is obvious: there are some very simple questions out there and some very simple answers.

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I can fix anything

Posted by chrisrick13 on April 21, 2012

It is obvious: it is important to ask questions

I am unconvinced that taking money from anyone to give to the government is a good idea. The government makes a pretty poor job of spending it.  The only reason for doing it is so that they will spend it on things that we won’t.  I might grudgingly give a pound a week to have the sewerage system maintained but I will be pretty agitated to find someone putting their pooh down a sewer that I have paid for and they have not.  Same for visitors.  So the government does the equalisation and collects off everyone as best it can (sic) and builds and maintains sewers for everyone.  I am sure I would not visit this country if I could not pooh till I got back or had to collect a receipt every time I went.  The system works if inefficiently.

What of the very rich?  Do you want to take lots of money off of people who have made a lot of money and give it to the government to squander?  I think I would rather that they were left to get on with making money.  They are clearly much better at it than a government all of which make losses.  But that is not fair.  Bah!  So I want to get value out of rich people for the greater good.  Taking it off them is probably counter productive and difficult.  There is also always an ‘enlightened’ country that will offer a home to the rich people and their money on better terms.  So we want to be ‘enlightened’ and still take money off the rich.  We also want that taking to be simple.  I have the answer.

For anyone with assets over, say, £1m the tax regulations change.  Each year that person must spend 10% of their money in the country.  There you are.  Simple as that.  What to they spend it on?  Anything they want but in this country.  Knowing they have to spend it they will be motivated to keep earning at a greater rate.  That will be good for us all in this country as they have proved they are good at it.  How do we know what their assets are and what they have paid and should pay.  That is simple.  They calculate it and tell the government.  Ah, you say.  They will lie and under-declare.  So they might.  There are not that many of them.  The rich-b*st*rds oversight committee is set up.  Each year they do a random detailed audit of a few of the rich b*st*rds.  If they have under-declared then the committee simply seizes the assets and sells them until the person’s assets match their declaration.  There is a lot of activity round the boundary but for the rich it is not a risk worth taking – remember they are not being taxed, just told to spend money on themselves.  Why bother losing £10m when you can guarantee keeping £9m by simply buying a new Roller.  Don’t forget that if you spend money acquiring assets then your spend the next year will go up.

A perfect solution that costs nothing to administer, just the expenses of the oversight committee.  Lots of people benefit and lots of  rich people suddenly want to live here.  (This probably pushes prices up in London meaning that all the rich have to spend more the next year.)  The country’s GDP will be on an upward trend for the rest of eternity.

It is obvious: it is important to ask questions and the answers allow elimination of the things that won’t happen.

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Topsy is back

Posted by chrisrick13 on April 21, 2012

It is obvious: I don’t like hoovering

I read a lot of stuff about conspiracy.  There are the bankers and rich people who really run things.  Politicians are at their beck and call.  I think it is too optimistic a view.  Put it all down to incompetence.  That covers it easily.  There are a lot of people out there with influence and running things that are well meaning.  Just because they are nice does not mean they are right.

I have a view that I am drawn back to from listening to the news on the radio each morning.  I touched on it in my response today to a comment.  I have not mentioned Professor Bartlett for a while so I need to get a fix.

All the politicians I hear and many of the economists (who ought to know better) talk of a return to growth.  Mr Milliband has that phrase high on his list.  He and Mr Balls imply a relationship between what they propose and growth.  They have no evidence that what they say is true.  Mr Osborne treads a similar path.  I might observe that by acting now we might be moving to a state where we can just squeeze in enough growth and austerity to pull it off and get on the virtuous spiral, though I doubt it.  Spain, Portugal, Greece and even France under Hollande stand no chance.  We stand no chance when Labour get in at the next election.  Though it might be a very different world by then.

The ‘can kicking’ is not about delaying for delay’s sake.  It is all predicated on delaying until growth returns.  Our current model of capitalism in general and banks in particular only works while there is growth.  When we do not have it the model fails.  The system fails.  I have to apply the prostitute’s question again.  The earth is finite.  The only thing I can think of tbat is effectively unlimited is energy.  A lot arrives every day from the Sun.  A lot of the past energy has been stored (oil) and with global warming we have arranged that the amount stored is actually going up.  Everything else is limited.  So a model of growth for human civilisation is, by defintion, limited.  It is one of those useless realisations for a human with a life expectancy of less than 100 years as the limits will be reached in some far distant future.

But it isn’t far distant.  We are on an exponential curve of consumption.  While we bump along the flat bit of that curve everything is a long way away.  Turn the corner and there is not much time left.

So it is with growth.  In the UK we aim for 2% growth a year.  Sounds reasonable, but we double our consupmtion every 35 years.  There are lots of things we can continue to double consumption of for a long time to come, but not oil or water.

And China?  At the current rate of expansion China will double…everything… in 9 years.  That is not going to happen.  Is a much slower growing China ‘a good thing’.  Probably, but not if you are a western economy where the can has been kicked into a future where growth with allow salvation of the economic situation that it finds itself in.

While I’m at it, lets throw in India as well.  The growth of these economies cannot carry on at the current rate.  An India and a China at twice their current size in 9 years is just not possible.  In a short period of time one of two things will happen.  Growth will abruptly shut down and even shrink or growth will shrink to something maintainable.  For the world this is like a nuclear device going off in my back garden or the centre of London.  The detail is different but the effect on me is not noticeably different.

So within 9 years something major will happen.  There will be no nice result.  No ‘soft landing’.  No gradual move to a different world order.  It will be very sudden and it will be soon.  Sounds very pessimistic, but it is not.  Without affecting your current way of life or your thoughts for the future it is entierly possible to live out a very pleasant life over the next many years.  Just it will be a different one.

How will it be different?  That is something you need to think about.  In the meantime I am concentrating on enjoying everything I do and not doing things I don’t like…except the hoovering which I can’t get away with.

It is obvious: I don’t like hoovering, but my wife likes me doing it with a greater intensity.

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Continental drift

Posted by chrisrick13 on April 20, 2012

It is obvious: we don’t have rings through our noses (at least not many of us)

Have you noticed how we are being prepared?  There is a pattern to this.  First the people stridently in public gaze suddenly go quiet.  Then reports come out that are attributable to nobody with a different message.  Then others come out with subtly changed wording to the earlier view.  Small changes in, and additions of, adjectives.  Finally the new reality arrives and we have forgotten the old one.  It is as though the new status was always the one we had.

Those in charge in Spain have been saying adamantly that they will not need a bail-out…until last week when the PM changed his wording and suggested that they would manage the crisis perhaps with help from friends.  Tosh!

Madame Lagarde has disappeared from public view.  An IMF report has come out that is giving an encouraging message.  I think this is a confidence boosting move (lying) and she does not want to be associated with it personally.  Watch for a big change of tone voiced by her as things start to go wrong.

Do you remember the EU change of treaty that Mr. Cameron vetoed?  The Dutch are now confirmed in that group which has the PIIGS, France and others already in it who must be punished the day it is signed into existence.  I thought there was some urgency about this treaty, yet it is still not in existence after nearly 5 months…yes it was that long ago that the emergency meeting was held to agree it.  France is about to vote in Hollande as president who has said he will re-negotiate it.  He might be my trigger.  Give him a few months to organise himself and France could well be off on a destructive trail seeking her own best interest.  As far as Hollande is concerned it is paying French people lots of money that has been borrowed thus ensuring that as a country it is moving as far away from competitiveness as possible.

The people of France are not being led by the nose.  They are not bothering to vote and are being led by someone else’s nose.

I have to mention Adam Posen.  His case has been illuminated by Shaun Richards.  Mr Posen promised that were inflation in the UK not at 1.5% in the middle of this year then he would have to re-think his position and not seek re-election to the MPC.  I heard that his name is being mentioned as a possible for a high post in the BoE.  Either he is a man to be reckoned with or a charlatan.  He was brave enough to name a figure (1.5%) and a date.  Few have done that.  If he changes his view and gets out of the MPC then he can be considered as a man of honour and high principle.  It will be interesting to see his new position.  If he doesn’t then he can be considered as the lowest of the low.  I feel sure that Shaun Richards will hold him to account.

I am going through the rigours of buying two cash ISAs.  In summary I can get 3.1%.  I have ISAs to transfer and this enables me to agglomerate.  I know you can get better if you commit for longer periods or meet some other convoluted rules.  The shadowstats website has the rate of inflation calculated consistently from some time back, but removing all the changes in its calculation.  It provides figures that allow you to make comparisons over a long period.  It has real inflation as 6.2%.

It is obvious: we don’t have rings through our noses (at least not many of us) yet we are still led around as if we did

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I’m not old

Posted by chrisrick13 on April 10, 2012

It is obvious: you are as young as you feel

I’m nearly 62 and clearly I’m losing it as I can’t remember whether I have written about this or not.  I’ve done 400+ blogs so maybe there is an excuse.

I’m not old but when I go on holiday abroad in 8 years I won’t be able to hire a car.  At least we get another 3 years after that as my wife is younger than me.  For example there is no point going to the US unless you have a car.  The only exception might be if you had a holiday in New York where you don’t need one.  70 is the cut off point.

We only got a mortgage on our second house because we took out an endowment policy.  It was by way of a bribe.  After 5 years we moved on and I took out a repayment mortgage while keeping up the endowment.  20 years later the policy paid out and I took another chunk off the mortgage two houses further on.  I worked it out and keeping the money in National Savings certificates I would have about doubled what I got from the endowment.  Even that would not have kept up with inflation.

Pensions are another function of getting old.  I’m now seeing what my pensions are very likely to pay out in the near future, not some  fanciful projection.  I’m going to have to live a long time for them to have been a good investment.

My knees don’t work properly either.  I played racquet ball the other day for the first time.  I limped about the squash court missing a ball that is at least twice the diameter of a squash ball that I played with so much 30 years ago.  The ball kept changing position as my varifocals put it in different places as my head moved around.  I suppose I enjoyed it.

Whenever I can get it, a nice nap in the afternoon really helps the day.  I certainly am not good for much after a gym session.  I mostly go in the evening.  Afterwards a shower and a quick bite and I am asleep.

So I have worked and saved so that I can enjoy my retirement.  Hold on though.  I could have enjoyed the money a lot more when I was younger.  I’m in increasingly poor shape to enjoy my savings.  Bangs per buck are not nearly as high as they were 30 years ago.

Why not spend it all and then throw myself on the mercy of the state?  Seriously.  Have a good time when you are young because unless you have a lot of money then being old and poor is not a lot different in terms of what you can do if you are old and rich and you had a lot better time getting there.

Back to a theme.  Enjoy yourself when you are young.  Spend every penny.  Invest in yourself.  Then you can work for the longest time possible, spending it when you earn it.  If you have kept fit as well then you will likely have a high velocity of death which means you can work until you drop and suffer little.

Savings and investments, as my assets prove, are a very poor way of dealing with excess money.

It is obvious: you are as young as you feel but you are still as old as your birth certificate says.

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All the King’s houses…

Posted by chrisrick13 on April 8, 2012

It is obvious: numbers will tell you anything

As an owner of two houses without the courage or committment to sell one I sit here predicting a house price fall.  I am not allowed to talk about it in my house.  The logic goes that I have been predicting it for so long I am bound to be right at some point.  The point is that I have predicted it correctly 3 times and indeed on one of the dips I bought my second house.  What of it now?

The Halifax and Nationwide put out their house price numbers in the last week.  One up and one down.  Hometrack also chipped in with an increase, but also put out a lot of words contradicting itself.  So there really is not much help there.  The Land Registry figures are definitive but a long time in coming.  Shaun Richards (as ever) put together some numbers.  In short if you use the RPI as your inflation measure then house prices in real terms are worth 70% of what they were in 2005.  That sounds a lot more like a crash than a dip.

The three predictors above are cautious about prospects for house prices over the next year.  They seem to be saying very little movement either way.  With RPI at 5% that means an £8,000 drop in price in real terms.  There is a paradox here.  The MPC has interest rates at 0.5%.  This is part of their efforts to meet their remit which is inflation close to 2%.  There is a belief that the real reason is to keep interest rates low so that many mortgage holders who would otherwise default on their loans can continue to service them.  Were they to default in numbers the banks lending that money would go bust.  So you would expect that with base rate at 0.5% the banks would, as in earlier years, have loans out at…maybe 1%?  Instead they have all just taken a step up and put their rates up close to 5%.  They need to do this because the money they are lending on the mortgages is costing them more in interest.  They have to make a profit!

If the lenders put their rates up they will force people to default.  If they keep rates down they will lose money.  This is not a paradox.  It is the area between a rock and a hard place for both banks and borrowers.  Remember that for the borrower they are paying £8,000 pounds in interest on their average priced house so that it can reduce in value over the year by…£8,000.  Perhaps they could just pay £8,000 in rent and miss out on the loss of £8,000?  There is only one pleasant way out of this situation and that is a booming economy where everyone is employed and wages are rising.  Nobody is predicting that (except the BoE).  Therefore there is a dislocation coming.  It might easily be that lots of people lose their homes and as a result the banks go bust.  Both lose and everyone else close-by gets caught in collateral damage, or is it friendly fire?

The Times said that people should move from the SVR of their lender to a different lender to get a better rate.  The Co-op bank is offering low interest rates on new loans where a 25% deposit is put down and even better rates if it is 40%.  There are close on half the mortgages in this country where the loan is greater than 75% of the value of the house: 5 million of them.  Many people have no choice.  They have to take whatever the lender throws at them.  Their only hope is that the bank will realise that the gun is pointed at itself and do something to keep the borrower from defaulting…but what?  I wonder if the banks are simply making as much profit as they can while they wait for the next gift from the government to rescue them when defaults start happening in large numbers.  (I’ll be round for a cheque when I know how much will be needed.)  Might as well squeeze the profit before the inevitable happens?

Is there another house price crash coming?  Of course there is.  I do not know how it will manifest itself.  Go back 30 years and use the ratio that the banks used then for lending money on houses and the value of a house ought to be around £100,000 today.  If that measure is right then there is 37% to come off house prices.  This not far off what has come off over the last 7 years.  The question is: will it come off in one short sharp drop or leach off over a number of years as it has just done?  Obviously a lot of effort will be put in by government and banks to manage a steady grind.  However there are a lot of my trigger events out there waiting to happen which will cause a sharp drop.

It is cowardly to make statements as above and not have a go at prediction.  As much as we are dealing with chaos it is possible to deal in the likely course of events.  Greece has defaulted but nothing happened.  The ECB has spent a trillion Euros and looking at Spain’s bond rates not to much effect other than that no bank has defaulted yet.  Economic data is increasingly being shown as suspect but a lot is coming out that is mostly negative now or predicting a poor future.  It has the feel of being in a descending submarine and you can hear ‘the plates’ squeaking.  Everything is fine but when one plate buckles so will all the rest.

I emphasise that even though there may be some undefined crash and there will be a lot of pain for a lot of people it will not be the end of life as we know it.  I am optimistic that what comes out the other side will be better.  So with that happy thought I have to consider the likelihood of a trigger in a given time.  Given that Greece has defaulted without problem and that we have got past the Easter holiday I think that there will not be a trigger event for some time.  I think that we will get through the northern summer.  Then the probability of a crash be very high.  So have a good summer break then get a comfortable seat somewhere and turn on the 24 hour news.  Perhaps even take a few small precautions over the summer months.

It is obvious: numbers will tell you anything you want them to

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