Here's a MSM view from bubblerific Scotland, pointing the harsh glare of reality of the continuing UK bubble party.
House prices rising to the level where NOBODY who works for a living could afford one (without being a ponzi scheme participant) is NOT healthy for a community, or a country, no matter what the bankers and leaders think.
This massive speculative bubble madness which spread worldwide like lightening in a bottle has now risen to the point where it is impossible to buy a home and make the monthly payments, no matter how crazy the lending standards drop.
An epic financial disaster now awaits.
Madness is the only sensible explanation for this mess
WHOM the gods would destroy they first make mad. Euripedes may have been describing the decline of administrations in ancient times, but how pertinent when watching the death throes of our current regime.
Consider next the housing market. It's not just house prices that are soaring. Repossession figures for the past three months, released on Friday, show a 22% rise in court orders. The number of families threatened with losing their homes has more than doubled over the past 20 months.
The governor of the Bank of England, Mervyn King, last week reiterated his view that house prices should be included in the indices used for monitoring and controlling inflation when he appeared before an economic select committee in the House of Lords. Chancellor Gordon Brown does not agree.
And one of Britain's biggest mortgage banks, the Abbey, announced publicly that it is happy to advance five times joint salary to a young couple buying a home, whereas a few years ago they would have only been able to borrow three times one salary plus the other salary.
This prompted cries of "irresponsible lending" from many quarters - not least Lib Dems shadow chancellor Vince Cable, who described it as "alarming" news which could prove a "financial disaster".
Politicians of all parties seem to have no idea what is happening in the real world. Where do they think people have been getting the money to buy when typical prices across much of the UK are touching £200,000?
November 05, 2006
Madness
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12 comments:
brilliant deduction!
If the English are mad, then the whole world is mad.
"WHOM the gods would destroy they first make mad. Euripedes may have been describing the decline of administrations in ancient times, but how pertinent when watching the death throes of our current regime...Madness is the only sensible explanation for this mess."
Truer words were never spoken.
In biology, we learned that a successful parasite never destroys the host. Yet today, we see political parasites gorging themselves at the expense of their victims and the planet. Both hosts seem to be nearly exhausted.
It is not difficult to entertain the notion that today's political leaders are being driven to madness by their demonic gods.
I thought the saying was 'those whome the gods would destroy, they first make great'. But that would still fit. The common man in the western world was toasting his own financial genius for having the tremendous financial wisdom to purchase a home. In honour of his success he took out a home equity loan and binged on those material items befitting a man of his economic prowess. He will be destroyed.
Patience, my children. We shall feast on the fallen soon enough.
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Good one disgorge. (:
You sound like Ann Rice's "Interview with the Vampire".
And now The Economist said that London prices are accelerating upwards again???
WTF????????
Even bigger bubble in U.K.?
When it craters are they going to blame Greenscam, Bernanke, or all them Jews too?
What is the property tax rate in England? How are assessments made? Is it mark-to-market each year? or is there a limitation on increase?
What happens if they can't pay?
Have there been many toxic subprime "liar loans"?
Or is this recycled oil money?
Uk is flat and falling. London is going through the roof - my neighborhood up 20% this year alone. Walking my streets, it's pretty obvious why.
Oil.
Saudis and Russians. Ferraris, Jags, Bentleys, Rolls Royces. And they're putting their money into London real estate so that their governments (or an uprising) cannot take it away from them
Little do they know, it's the market that'll take it from them one day
People in London are jumping onto the ponzi scheme to the point that four strangers are getting together to get a "pool mortgage" using the 4 incomes to qualify for a huge loan.
What happens when one of the four loses their job? Or wants out?
What a mess. Ponzi central
So Keith, have you finally awakened to the fact that lots of Americans haven't bitten the bubble apple as badly as other countries? Australia, UK, Spain, are just a few. And have you looked at Moscow? Shanghai? Dubai?
Yes, many Americans in LA/SF, SJ, NY, Boston, Miami, maybe have gone way out on a limb, but most other places? I'm sorry, but today I was racking my brain thinking of all my friends and co-workers in Phoenix and their incomes compared to their homes and I can't come up with one over extended.
Where I use to work, most people earn $120-150,000 with two incomes. So 3.5x income would be homes that are around $420,000 for a household earning $120,000? That is two nurses incomes with no overtime in Phoenix. Add a different profession, say one nurse to one electrical or aeronautical engineer or attorney and you can go up to $200,000 quick. Most my retired AF friends? They get between $1200-2000 a month in government pensions, then they work other jobs (one civil service and earns $48,000, plus $15,000 pension, plus his wife works earning $26,000, and they rent their first house out that is almost paid off they bought in 1982 and earn another $5,000 a year after expenses and they are an average middle class working family (not mid-level professionals or professional class) so that is just under $95,000 and they earn the least of all ou friends. Another AF bud earns $60,000 at the GM proving grounds, his wife is on disability from the school and also gets SS disability plus their AF pensions and earn over $110,000 from those plus the income off two rentals that does more to reduce their income tax than give them an income.
A group of nurses I interacted with outside my department of Radiology frequently had both husband and wife working as nurses or other professional jobs like accounting, law, engineering, doctor, etc, so all earned in excess of $120,000 easy. Even the mexican who did floors and his wife working in a local factory earned $55,000 and I'd consider them very blue-collar, minimum skilled employed. The only ones just getting by were single moms (even if they were a nurse earning $75,000 it was hard with two or three kids) with no education and most of them only earned about $20-30,000 in our hospital.
Most of them that bought larger homes, sold their previous homes and put all the money down on the larger homes so if there is a bust they'd see no real gain or loss. Still, the most expensive home any of my non-doctor friends (and most of the doctors at our hospital bought their homes 10-20 years ago and only one, a cardiologist was building a 20,000 sq ft house for cash...he has a very successful practice) was $490, 000 in North Phoenix and they put $200,000 down and then when they sold their other house (they owed $45,000) they put the remainder down on their home-they both are nurses and earn about $150,000 a year between them with thier over time. She is asian (her husband caucasion) and strongly believes in paying everything off as fast as they can and they are only in their late 30s.
I can't come up with anyone hurting in Phoenix that I've known for the past 10 years. All have good jobs, strong roots in the community, little to no debt.
I'm sure most of you can name a large number of your friends who are 30-60 years old that are similar to all the people I mentioned above. Even my relatives in California working average jobs earn $100,000 a year with two incomes minimum.
I really can't believe that more than 20% of American homewoners are that over extended.
Where I use to work, most people earn $120-150,000 with two incomes. So 3.5x income would be homes that are around $420,000 for a household earning $120,000? That is two nurses incomes with no overtime in Phoenix. Add a different profession, say one nurse to one electrical or aeronautical engineer or attorney and you can go up to $200,000 quick.
You really show how out of touch with reality you are by implying that these are the typical incomes of most people. You probably voted for George Bush in the last election and by his crap the everything is peachy. Even the governments own BLS data shows just how far off base you are. Do you get your information from Fox News.
No - He knows people who are nurses and otherwise work in the health care sector. That is the only place where the incomes are still strong for most people.
Thanks annoymous. The medical field isn't the only one still paying good wages. I have friends who are engineers, attorneys, government employees (and retirees, you know you can get up to 80% of earnings working for the Post Office), teachers, doctors, nurses, speech pathologists, bio-medical repair, radiology techs, ultrasound techs, (where else can you get a 2 years degree ie Rad Tech, US TEch and earn $50-100,000 if you work a little overtime), HR managers, Information Tech people, software, computer, case management, paralegal (my wife), to name just a few jobs and there are many more that earn so much more. I see a lot of self employed making more than those I mentioned above. And those who own their own business? A red neck husband of one of my wife's friends owns a auto repair shop and earns in excess of one million a year off his shop. He use to be a manager of a Sears autoshop before he started his own. I'm sure there are a lot of people who can list other self-employed business that earn (after expenses) more than $100,000 a year, or owners of franchises, or people in the financial industry (look at all the guys on wall street earning millions) or sports, or mortgage brokers (who may soon be out of work). The lady here in Austin who did my mortgage and is a friend of my best friend here, made over $150,000 last year and that as on top of her husband who is a CPA. And several friends who have been teachers for fifteen or more years easily make $50,000 and only work 9 months. What about policemen? Firemen? Most start in the mid-to high 30s or more in big cities.
I do understand there are a lot of people who don't earn, with two incomes, $60,000 a year, but most of them chose the wrong careers, don't have enough skills or education that is in demand (I didnt' say they were stupid) Even managers at starbucks make descent salaries so times that by two (like my nephew and his wife and she just became a regional manager so together they earn well over $85,000).
That doesn't dismiss the poor (many who are on welfare, immigrants who don't speak english or have an education, high school dropouts, people with mental or drug issues, single moms who had kids too young and no education) who are trying to get by on minimum wage or even $10 an hour. Every country has an under class.
My wife and I quite very high paying jobs to move to Austin and take a year off. We know that when we go back to work we'll probaly take a good 20% reduction in pay but should be back up to what we earned within three years.
The point is what is your age, education level, marital/partner status, how do you spend your money, etc. I'm sure most of you can look around and see a lot of your family and friends that earn good money, inherited good money or a house (especially those in the bubble markets) and I can say that thirty year olds today, with an education, make a whole lot more than we did in the early 80s. My nephew in SJ earns almost six figures and he just turned 30 working in the high tech business there. It took most of my friends thirty years to get there.
I guess it is sort of like AIDS. You read the statistics but the numbers never seem to add up. I worked with a lot of gay people in the medical field and most of them did not know anyone dying of AIDS personally, though they always seemed to know someone who knew someone. As a medical worker who delt with acute care patients I only knew a handful of patients that were diagnosed with AIDS. The same is true with income and home debt. I know people who know people on the edge but personally don't know them. I can only tell you what I know in my circle and in my little world.
I know there are folk out there in foreclosure but in my whole life only knew one guy personally who lost his house because of a divorce in 1990. I know most of my friends and family wether in Phoenix, San Jose, North Carolina, Tampa, Austin, Tuscon, Portland, or Edmonton, all have good jobs, own a house they can afford or rent (if they can't afford), have little debt, most own their cars, most have one credit card, don't take out their equity.
That is why I believe that the BUBBLE DOES EXIST but that only a fringe will get hurt, those who over-extended themselves, bought more than they could afford, live in the most bubblicious cities, bought in the last two years without a substantial down or fixed rate loan, the rest are conservative, financially prudent, and may loose some paper assets but not thier homes.
You know you got it bad when the Canadians are saying that the US housing market is tanking
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