Property Market – Drepression on the way August 7, 2007
Posted by ukmortgagez in Economics, Mortgage Economics, Mortgage News, Property.trackback
Its been a bit of time since we last updated this blog so I thought I would catch up on the news.
The US property market is in decline with a number of mortgage lenders in trouble.
It looks as if the UK property market is going to flatten out. You can check this site out for UK housing stats in your area.
UK interest rates are going up too.
So the obvious conclusion is that at sometime in the next year or so property prices will be hit.
The US Dollar will devalue further under the weight of the US debt.
Here are our predictions:
- Interest rates in the UK to go to 7% (thats only 1.25% more) in the next 2 years.
- The Pound will strengthen against the dollar but remain steady against other major currencies.
- There will be global recession possibly leading to a global economic depression in the next 2-3 years. This could be as bad as the “Great Depression” 1929.
- The housing market (globally) will be crushed and should devalue by more than half of the current pricing (conservative estimate). This will be mainly due to a run on property by the banks looking to secure their debt.
So who will be left standing and who will benefit:
- People will real value will remain in business but marginal businesses will close down. Debt will not be cheap.
- People with real money (not debt) will be able to pick up great deals and will benefit in the long term.
- People with cash will receive high rates of interest (I have personally seen 24% interest rates in my life time) and property was cheap.
- This will lead to government reforms and a stream lining of the economies across the world.
- Oh and my last big prediction will be that the US Government will default on its government bonds leading to and end of the US dominance and a pull back in military spending, which will ultimately change the global power shift across the world.
So hold on kids this is going to be quite a ride.
I wonder why you say the US government will default on its government bonds. What on earth would make them do this? If foreign holders don’t renew their US bonds they can either hold as cash in bank the dollars they recieve for their bonds, or use the money to buy US goods or assets, neither of which is bad for the US. Besides, do you really think China can afford to stop accumulating dollars by refusing to sell their goods to US consumers? Won’t this have a huge impact on their economy and bring on more civil unrest than they can deal with?
Why do you think a default on US bonds will result in a pull back on military spending? The one thing has no connection to the other. Military production and spending is all generated internally and has no connection to the world economy, and in any event is less than 7% of the $14 trillion US economy. If anything, a default on the bonds held by foreigners would reduce the US debt and free the US to spend more on defense. However, we are now entering the theatre of the absurd.