tag:blogger.com,1999:blog-1141932539860553199.post6136335536166489311..comments2024-03-05T10:52:24.691+00:00Comments on Mark Wadsworth: Any excuse is good enough for another land price/credit bubble...Mark Wadsworthhttp://www.blogger.com/profile/07733511175178098449noreply@blogger.comBlogger14125tag:blogger.com,1999:blog-1141932539860553199.post-79395873231953048112016-07-06T15:45:09.142+01:002016-07-06T15:45:09.142+01:00so you are gambling on the government stepping in ...<i>so you are gambling on the government stepping in to prop up the bubbles, as they have done so many times before?</i><br /><br />No.<br /><br />For valuing property companies I look at the assets. I ignore all the intangible assets. I discount the property based assets by a third. Then I subtract all the liabilities.<br /><br />If the price of the share is still around book value after that I'm a buyer. Of the main REIT's British Land Group and Land Securities do the best on this test. They are trading at around book value using the above test.<br /><br />The housebuilders are still over-valued on this test, but then people attach hope value to their landbanks. So this is to be expected. I'm not buying them at the moment. If they fall further I might be interested.<br /><br />On Virgin Money I consider myself a long term investor in a good quality company, with good quality assets, which is backed by proper long term investors. I am quite happy to hold shares in this company that I acquired at under current book value. If there is a recession I would expect their assets / earnings to suffer a hit and their share price to be depressed longer, in which case I will probably buy more of it.<br /><br />At the end of the day, I can't touch my pension until 2037 at the earliest, so these are very much long term 'value' investments.Steven_Lhttps://www.blogger.com/profile/05029437876479574883noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-66672995200271016242016-07-06T11:01:31.589+01:002016-07-06T11:01:31.589+01:00MW agreed,
I read a modern report discussing Keyn...MW agreed,<br /><br />I read a modern report discussing Keynes 'animal spirits'; the core was that business men are not in fact moved by a % rise or a fall in interest rates when making a real business, capital investment. So Keynes profoundly understanding the economy yet again. And our guv deliberately asking the punters to look at the wrong card being held in the wrong hand like any old party trickster.MikeWhttps://www.blogger.com/profile/15455583313857077618noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-34792724528405146592016-07-06T09:24:28.023+01:002016-07-06T09:24:28.023+01:00PW / MW The paradox of thrift is a fallacy. Keyne...PW / MW The paradox of thrift is a fallacy. Keynes was wrong, again.Lolahttps://www.blogger.com/profile/04586735342675041312noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-9795629534499039342016-07-06T06:55:13.570+01:002016-07-06T06:55:13.570+01:00L: "Death really is too good for them." ...L: <i>"Death really is too good for them."</i> Agreed.<br /><br />CC: <i>"Was it only us poor proles that learnt anything from the 2008 fall-out?"</i> It appears so.<br /><br />SL, so you are gambling on the government stepping in to prop up the bubbles, as they have done so many times before? I suppose that is the safest way of investing.<br /><br />D: <i>"Bank capital is not a sum of cash held aside from investment, it is the calculation made from the sum of the value assets minus the liabilities."</i> Spot on!<br /><br />PW, you mean the Paradox of Thrift. That is fine in theory but in the real world, especially a Home-Owner-Ist real world, it is nonsense.<br /><br />Very little productive activity is funded by loans. Most businesses are funded by share capital and retained profits; most household spending is out of current wages.<br /><br />Most borrowing and lending (by volume), is related to acquiring and speculating in land. And in the absence of lending, land selling prices would be much, much lower.<br /><br />So a contraction in lending/borrowing primarily hits land values and not the productive economy. <br /><br />B, "Why bother to think when... you've got a ready made excuse to pump up the land price and credit bubbles?"Mark Wadsworthhttps://www.blogger.com/profile/07733511175178098449noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-53567631258444771182016-07-05T20:59:49.170+01:002016-07-05T20:59:49.170+01:00Just as the answer to anything to do with the clim...Just as the answer to anything to do with the climate is "global warming" and anything to do with politics is "it's Jeremy Corbyn's fault", so the answer to anything to do with economics is "lend more money". Why bother to think, when you can use these ready-made answers?Bayardhttps://www.blogger.com/profile/15211150959757982948noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-5620443317246941502016-07-05T20:14:23.120+01:002016-07-05T20:14:23.120+01:00MW, "predictions about economic doom and mass...MW, "predictions about economic doom and mass unemployment are correct (...) they should be advising people to pay off debts" - this is common sense speaking, but doesn't current economic orthodoxy say that if people are paying off debts, it is like voluntary taxation or saving thus decrease aggregate demand and cause even deeper depression? also, amount of money in circulation goes down when people pay off debts thus lowering inflation (which is also supposed to be a bad thing).Piotr Wasikhttps://www.blogger.com/profile/05460291916106181718noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-49827381274116667962016-07-05T19:55:55.578+01:002016-07-05T19:55:55.578+01:00Agreed, the policy has contradictory features. A b...Agreed, the policy has contradictory features. A balance sheet capital buffer is to protect the capital against reductions in asset values. <br /><br />Banks capital is not a sum that is "held" by banks and is "Freed up" following a reduction in capital requirement, as is the description in the article . <br />Bank capital is not a sum of cash held aside from investment, it is the calculation made from the sum of the value assets minus the liabilities.Dinerohttps://www.blogger.com/profile/14632385731642361211noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-80203465246226110332016-07-05T19:51:14.638+01:002016-07-05T19:51:14.638+01:00Aren't these kind of downturns caused by folk ...Aren't these kind of downturns caused by folk not borrowing / investing / buying stuff? I don't see how letting banks leverage themselves a bit more will increase demand for credit. <br /><br />Once the new PM / Chancellor are in place they'll be able to start work on the demand side I guess. Expect bigger 'help to buy' giveaways, guarantees and sooner or later they'll probably push for 25 year fixed rats like in the US.<br /><br />Hell, if they bring in 25 year fixed 4% low deposit mortgages I might even buy one!<br /><br />I topped up my holdings of Virgin Money Group again and brought some British Land (which is pricing in a 35%+ drop in commercial property now) today. This is the 'bear trap' I reckon and it time to stock up on land and lender shares.Steven_Lhttps://www.blogger.com/profile/05029437876479574883noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-42753819563399100832016-07-05T18:59:11.177+01:002016-07-05T18:59:11.177+01:00Was it only us poor proles that learnt anything fr...Was it only us poor proles that learnt anything from the 2008 fall-out?<br /><br />As it seems the BoE clearly didn't offering more dosh to our TBTF banks, just when it looked as if they were off the laughing gas. Carney is an utter fool; it's like taking the local Alcoholics Anonymous members on a booze cruise to cure them!<br /><br />As for the commercial property funds, looks like they'll be lining up cap in hands, in Threadneedle Street for a free money hand out soon.<br /><br />Of course when it all goes breasts up he can feck off back to Canada and blame it all on Brexit. Meanwhile Osborne continues his MacCavity (oops have to watch it Maccy D might sue me for using Mac) impressions.CornCrakehttps://www.blogger.com/profile/10078964155412647457noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-58885515116288797712016-07-05T16:29:37.314+01:002016-07-05T16:29:37.314+01:00Death really is too good for them. The bank has a...Death really is too good for them. The bank has also cancelled its visit to Norwich later in July. Shame. I was going to make the effort to go and have a go at them. e.g. Since Carney is a remainer shouldn't he resign now?Lolahttps://www.blogger.com/profile/04586735342675041312noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-20780542353419204272016-07-05T16:03:59.565+01:002016-07-05T16:03:59.565+01:00Of course we could just regulate what assets a ban...Of course we could just regulate what assets a bank can hold and create instead of doing crazily silly calculations.Randomhttps://www.blogger.com/profile/04445772572707818311noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-3226789268674173582016-07-05T15:58:17.724+01:002016-07-05T15:58:17.724+01:00SME demand for loans in a downturn is going to fal...SME demand for loans in a downturn is going to fall, so I guess the extra lending will just end up in the usual place...mombershttps://www.blogger.com/profile/09650866436764567516noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-36593629649963680702016-07-05T14:57:18.341+01:002016-07-05T14:57:18.341+01:00RM they are mad, aren't they?
Let;s assume t...RM they are mad, aren't they? <br /><br />Let;s assume their dire predictions about economic doom and mass unemployment are correct - in that case, they should be advising people to pay off debts as much as possible and not to borrow any more for the time being.<br /><br />Is it only a few people like you and me who spot the irony in all this?Mark Wadsworthhttps://www.blogger.com/profile/07733511175178098449noreply@blogger.comtag:blogger.com,1999:blog-1141932539860553199.post-82488936378706440542016-07-05T14:11:53.342+01:002016-07-05T14:11:53.342+01:00Just listened to BBC radio news. Main news item wa...Just listened to BBC radio news. Main news item was that the BoE<br /> wants to encourage banks to lend more in the wake of the<br /> referendum. Plus the BoE is concerned about debt levels. Now hang<br /> on: for every extra £X banks lend, debts rise by £X. Doh! <br /><br />You thought the Simpsons were stupid?<br />Ralph Musgravehttps://www.blogger.com/profile/09443857766263185665noreply@blogger.com