New worries are never new, just recycled - 2 - emailed to subscribers
Wed, 13 Sep 2006

More on those worries, as articulated in newspaper articles.

Click here to see the file...

(The full article is not scanned here)

It might also be added here that since all university finance professors tell us that the future cannot be forecast, and that history is bunk, is it any wonder we see such articles as the one here and that the public is continually confused.

There has so far however, been a very clear (average) 18 year real estate cycle, and as I tell you often enough, the cycle MUST happen because land price is simply a function of its annual rental value. If this rental value is not collected as a government revenue source and at the same time permitted to be enclosed (i.e. fenced and privately owned), it will capitalize. This is rather a simple process, but does take an inquiring mind to follow it through. The only questions is: why 18 or so years ?

I refer you to Harrison's books, in particular 'Power in the Land' and follow up book 'Boom Bust' should you wish to study that question and the process further.

And so it is with articles coming to the fore now in the US:

I think the markets will climb the worries put out by such doom-sayers - who tend to write with their emotions more often than not. Rarely does the Fed tighten dramatically into the last year or so of the political cycle, and republicans need to be re-elected in Nov 2008. With so much credit and money being created still to fight the war on terror (what a con that is) I still find it hard to see a sustained downturn before the end of 2007/8. But of course one can be wrong. We will continue to watch the charts and indicators, rather than holding opinions. Nevertheless, an article worth reviewing.

In the UK, land prices are still going up, if newspaper reports are to be believed.

People read these things and act: fear of missing out then drives the market even higher. Note - 'record loans', 'mortgaged to the hilt' - shades of the late 1980's for those who can remember that far back. Into the winners curse phase to use Fred Harrison's terminology I'd say.

Should be noted though, the UK does have slightly different circumstances in one respect: it is believed that around 2000 eastern Europeans arrive DAILY at Victoria Station on the 45 daily bus services from home in search of work, now that they are part of the EU. All looking for a place to sleep as well. Keeps wages low, land price high.

PS, have a look at the Ali G controversy whilst you are at this site, what a laugh. The dictator in Kazakhstan needs to develop a sense of humour.

Talking about recycled worries, see the doubts come into commodities once again this week, Sept 11 and 12. 120 degrees from the May 12 reversal, for same reasons.

Notice how the 5 yr 9/11 anniversary brought far more emotion out than did the 4, 3 and 2 year time frames. You are seeing the circle in operation here. 60 degrees in months in this instance.

The Financial Times did a review of Australia's 15 years of growth earlier this month, looking at banking in particular. Said one analyst: "Australia is a wonderful place to be a bank. There is home loan growth, no real competition, everyone closes branches and reduces costs. You have low inflation, a low interest rates and few loan losses."

Added, phil, and a government protected license as well.

Print This Page
Home ----- Contact Us