Fixing symptoms is not a solution

This is an interesting conversation that appeared on Bloomberg with Jim Bianco. He makes the interesting point that there are really two roads out of the place we are in, depression or reflation. Internationally Governments are doing all they can to support the economy, the issue however, is that when these plans don’t work it will be pegged as being a ‘failure of capitalism’ when in fact, it only reinforces the fact that capitalism is working as it should by getting past a bubble and letting the prudent players win out in the end. The ‘Why’ is really ‘why are we trying to stop the market from working’ not ‘Why did this happen’ or ‘why me’.

Fixing symptoms is not the same as finding a cure.

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House prices in the near term: Robert Schiller

Economist Robert Schiller of ‘Case Schiller’ report fame says that he believes the housing market will fall further, confidence is everything in the property market and he says that confidence is at a record low and that is one of the primary reasons for his feelings on future prices. This makes for some interesting viewing, his book ‘The subprime solution’ and another called ‘Irrational exuberance’ are both excellent reads if you want to get a view on the current situation from a man who saw this coming. A vital point he makes is that avoiding additional supply is part of the solution.

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How far are we down the rabbit hole?

How far into the credit crunch and liquidity crisis are we? Banking stocks would have you think that it’s all upwards from here on in but how can you be sure? The Regulators in the USA were prepared for 100 to 200 bank closures in the 12-24 month period from the end of 07′. Thus far we have only seen eight actually close.

The total amount of assets involved is €38 billion. That might not seem like much when talking about bankers money, but keep in perspective that its 38,000 units of a million, its twice the size of AIB, its more than all of the lending market in Ireland for the whole year of 2007. And of course this is just the portion that have gone under, the actual ‘writedowns’ that other banks are surviving are (when added together) much larger, which means that some banks are just better able to take their blows than others. The worrisome thing in some cases …

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'Clearance sale, prices 20% off!', not in shops, on property….

Last week Capel Construction made news when they made a massive reduction in asking price on properties in D15, now more developers are jumping on board both the Albany Group and Abbey Group have reduced asking prices by up to 25% in an effort to get buyers back into the market, I’m sure there is a shortage of smug estate agents ‘taking orders’ for these homes, I think the market is truly at a point where they will have to ‘sell’ these units if they want to shift them. Prices in Holywell (the place where Baiba Saulite was shot) are now at 2005 levels,

The method clearly works as Capel sold 56 units once they dropped the price, so perhaps there is demand out there but its from a public so worried about price falls that they will only purchase if there are considerable reductions in asking price. Personally I don’t believe that some of these prices even represent true value, how will the 56 purchasers feel if the prices get reduced yet again to attract more buyers? They would …

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‘Clearance sale, prices 20% off!’, not in shops, on property….

Last week Capel Construction made news when they made a massive reduction in asking price on properties in D15, now more developers are jumping on board both the Albany Group and Abbey Group have reduced asking prices by up to 25% in an effort to get buyers back into the market, I’m sure there is a shortage of smug estate agents ‘taking orders’ for these homes, I think the market is truly at a point where they will have to ‘sell’ these units if they want to shift them. Prices in Holywell (the place where Baiba Saulite was shot) are now at 2005 levels,

The method clearly works as Capel sold 56 units once they dropped the price, so perhaps there is demand out there but its from a public so worried about price falls that they will only purchase if there are considerable reductions in asking price. Personally I don’t believe that some of these prices even represent true value, how will the 56 purchasers feel if the prices get reduced yet again to attract more buyers? They would …

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