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All the Balloons are Fully Inflated|
. The chart shows that the house price-to-earnings ratio rose to 5.8 in April 2007 from 4.8 only four years earlier. By October 2012, the ratio had fallen to 4.39 but has risen since then to 4.62.
What goes up must come down again, given that equilibrium of around 3.65 or so looks sustainable in the long run. Bank managers historically don’t grant mortgages of more than four times earnings. This suggests house prices are currently as much as 25 per cent overvalued.
- House prices are booming again but the bust that’s bound to follow will cost us dear
This is the typical B.S., this time from professor of quackonomics, David "Danny" Blanchflower, who makes the claim that his daughter is over 250 years old and was the cause of the US War of Independence: I was in the beautiful city of Charleston, South Carolina where the first shot was fired in the War of Independence over the weekend for the wedding of my second daughter.
As Sir Arthur Conan Doyle wrote, if you eliminate the impossible (that a professor of quackonomics, awarded the power to vote on the UK's Money Printing Committee, can't read and write at an adult level) then whatever remains, however impossible, must be the truth (that his daughter is over 250 years old). Douglas Adams, however, was more cynical and in this instance correct, writing, "If you eliminate the improbable, then whatever remains, however impossible, must be the truth", though Conan-Doyle did point out that, given a ganster-supplied edukashun, a doctor of medicine might be so thick as to be unable to understand the "elementary". Blanchflower even uses the lame "Great Recession" propaganda; freakin' hilarious!
Whenever the UK propaganda rags mention the p/e ratio they never quote the value of the two together, or in this case neither.
However: The average home was valued at £170,514, it said.
- UK house prices rise at brisk pace, says Nationwide
And : Low pay is defined as two-thirds of gross hourly median pay, set at £7.44 an hour in 2012 (£13,620 compared with the median salary of £21,583).
- Why the UK's recovery lacks a feelgood factor
Though a median rather than average salary, there's little difference and it puts the p/e ratio at 7.9 and not Blanchflower's 4.62!!! Is it any wonder that there's been criticism of the UK's Help2Buy policy blowing a bubble? Blanchflower is also probably lying about interest rates rising rather than being kept low for decades to come as is happening in Japan (in its 2nd decade of ZIRP) and which will be used to defraud pensioners of any return on their savings.
But then as PIMCO correctly says, everything is in a bubble at the moment. Bonds are bid up to the lowest interest rates in history and shares offer similar returns thanks to the Reverse Yield Gap. Oil has risen from under $10 a barrel in 1999 to over $100 despite costing typically less than a dollar to pump it out of the ground and exacerbted by all the oil-rich nations the Great Satan is illegally attacking (Syria will be used as an excuse for $500 oil). Soft commodities have been bid up so that beef and dairy farmers have gone bankrupt; all pushing up consumer prices. All commodities are in a glut despite record prices artificially manipulated up: Production will exceed demand by 408,000 metric tons next year, the most since 2001, compared with 167,000 tons in 2013, the average of 15 analyst estimates compiled by Bloomberg shows.
- Copper Rally Reversing as Glut Expands to ’01 High: Commodities
The USDA bought 7,118 short tons of refined beet sugar for $3.6m, or 25.20 cents a pound, from Western Sugar Co-operative in Denver and sold it for $900,000, or 6 cents a pound, at a loss of $2.7m to Front Range Energy, an ethanol producer in Colorado.
- US struggles with sugar surplus
As for cash, the BoJ, Boe and FED are all hyperinflating their monetary bases by 40% per annum. When the commercial banks start lending (and they have to) the money supply will explode. With the deficit reduction by the US Treasury looking like creative accounting, the only reason the FED might taper is because there's nowhere else for the money to go except gold, especially if all those bubbles start to pop; that and/or the risk of a hyperinflationary run on the dollar. By an amazing co-incidence, gold peaked just as the SNB imposed its cap on the Franc in 6Sep11 and whilst the CME repeatedly raised margin requirements and just before Jamie Dimon raided the client accounts at MF Global and PFG Best. Despite nominally being a peg against the euro, the SNB with 1,290 tonnes of gold was buying up dollars and sterling rather than euros.