Hi, after listening to Rees Mogg and others… well, «no deal» possibility isn't that high. And how did he calculate that real estate prices can go down by 35%? Even if they do, I think they will return to normal in short period of time.
I also had to watch this vid first to realise what are they talking about
> I also had to watch this vid first to realise what are they talking about > quoted1
I wouldn't rely too much on that video. What it says about Chequers is certainly not true, it does NOT appeal to any sides — like JRM said it doesn't appeal to the pro Europeans, nor to the European Commission and the Eurosceptics don't consider it to be proper Brexit. It has no supporters.
In the long run — of course there will be some sort of a deal. But which one? Some don't consider Canada + a proper deal anyway. That is just the point — May wasted too much time trying to appease both sides (Leavers and Remainers), keeps pushing Chequers — which is another waste of time and effort as has zero chance of making it through the House of Commons, let alone being accepted by the EU Commission. The risk of no deal is there purely because of the lack of time. March 2019 is fast approaching and there is nothing on the table yet, absolutely nothing. And — mind, that the complexities of any deal with the EU are enormous, the Irish Border is not the only issue. There are zillions of others. The country has been in the EU for 40 years. It is not like signing a deal with Canada which has never been an EU member, doesn't have any border issues with any EU countries, etc. And that took over 10 years for the EU — to finalize the details. So the risk of the «no deal» is quite high in the short term at least. Grin (25771) wrote in reply to post:
> nd how did he calculate that real estate prices can go down by 35%? Even if they do, I think they will return to normal in short period of time. quoted1
It is not JRM, but Mark Carney who came up with those predictions and they are not groundless. In the beginning of 1990s (I was here already but too little to realize what was going on), my husband is 5 years older than me, so was 21 then and at the Uni — and the recession which followed when the UK didn't join the Euro was massive — a whole generation was «wiped out». The house market collapsed, the interest rates were 15%, people were losing houses as couldn't afford mortgages, etc. Yes, it became better a few years after, but he watched his mother losing a successful property business — she owned an Estate Agents, she is still bitter about it when remembering it even now.
>> > I wouldn't rely too much on that video. quoted1
⍟ Grin (25771),
P, S, The video is explaining everything correctly (I didn't watch it yesterday, cause it was from Channel 4 I just assumed it was another Government promotion of Chequers), but Chequers is considered to be a mistake here — by all the camps in the argument The reason for the housing market prediction is the following (by the way my husband made that prediction on the day of the Referendum result, all his predictions came true — weaker pound, falling housing prices. All this has already been happening here): Because of the uncertainty — the sterling is a lot weaker (before the Referendum £1 used to buy 1.43 Euros, now it buys only 1.1 Euros), therefore the inflation has been on the up and the Bank of England 's target of 2% inflation has not been met for quite a while. Therefore — since the Referendum two interest rate rises already took place here — first from 0.25% to 0.5%, then to 0.75%. Such interest rate rises might seem tiny to someone from Russia, but they make a huge impact on people's finances here. The reason is this. Imagine that you took out a mortgage when the base rate was 0.25% (therefore the banks and building societies would have been lending at 2%-3% - this went on for a decade without any base rate rises by the way). Now the cost of money effectively doubled or trebled. That means a lot won't be able to afford to buy and those who are paying off their mortgages will be struggling. (most mortgages in the UK are variable, not fixed, they are only fixed for the first couple of years, then it is a variable rate- depending on the Bank of England's base rate. 5 to 10 years fixed rate mortgages also exist, but they are not as common). Anyways, as the housing market is falling — so is the equity. Do you know what equity is? I will explain it to you. Say you bought a one bedroom flat for say £100, 000 in the beginning of 00s (I bought my first flat in Essex for £64,000 by the way, can you believe it? There are no prices like that anymore these days). In the market of rising house prices — a couple of years later your flat is worth £130, 000 (all figures are arbitrary, for the sake of an example). The difference is the equity. Using the built up equity, you then can start climbing up the property ladder — buying a bigger place, etc (as flats always grow in prices at a higher pace than houses, especially one bed flats cause this is what is the easiest to buy for the first time buyers). In the market where the house prices are falling, the opposite happens. Say your flat instead of £100,000 is now worth £70,000. You are paying more for what is worth already less, you can't move anywhere cause if you were to sell — you would find yourself in huge debt all of a sudden. You are stuck, and it slows down the whole buyers' chain. As those who own flats with negative equity can't «move on» to the next stage. They are stuck, the first time buyer is also stuck as a result because there are no flats are available for them to buy. The whole market slows down and as a result — the prices are falling even more. It is like a vicious circle. The situation of the 90s won't repeat itself to that extent. Because in the 90s the Bank of England was not free of the Government, it was politically controlled. Thatcher wanted to join the Euro at 1 pound sterling to 3 Deutsche Marks. That was unrealistic, it was her political wish (German economy was too strong for that to happen) and the markets realized that — at the time Soros and the crowd made a fortune bidding against the Bank of England. In the end the pound was kicked out of the ERM (Exchange Rate Mechanism) and the interest rates went up to 15%. It was not a very long crises. But those people who were starting out in life — who bought their first property at that point in time — ended up pretty much effed for a long period of time. Because here — it is important to make the right decisions from the start- otherwise one can get into debt, spoil their credit rating, etc. etc. The later generation — benefited from it, because in mid 90s the house prices were low (great for the first time buyers) and it became the market of rising prices again. Here it is all about being in the right place at the right time, i.e. being in the position to take advantage of the market conditions is the key to success. Why — in the event of a disorderly Brexit the situation is not gonna be as bad as the 90s. Bank of England is independent in its decisions from the Government, it follows its own targets — inflation target, etc. The Bank of England was made independent, i.e. was granted freedom to set its own interest rates after those events of the 90s- it happened in 1997 (Bank of England becoming independent). Everyone was very happy to see that happening https://www.bankofengland.co.uk/events/2017/sept... .
So it won't be as bad as the 90s, but there is a lot of scare mongering going on.
The fact is — the Referendum result has been causing a lot of uncertainty in the markets. A lot of investors have been putting back their decisions (putting them on hold) because noone knows precisely what kind of Brexit we are going to have (the difference between the Soft and Hard Brexit is massive). Theresa's dithering and indecisiveness has been contributing to that uncertainty a lot. Two and a half years passed now since the Referendum result and we are still none the wiser — as to what is gonna happen and what to expect. People are just pondering re this or that scenario and that is it. That is why I called her a shit PM.
Where Mark Carney is right - in the event of a disorderly Brexit - sterling will weaken even more, the inflation will rise , therefore one can expect more interest rate rises. In which case the house prices will crash - at least for a while. But it will be enough to make a very negative impact on a lot of middle class households, their spending, etc.
P. S. William Hague in The Telegraph is predicting that the UK is heading for the worst Constitutional crisis in 200 years unless the Chequers deal is accepted by the Tories. William Hague is a prominent Tory, a former Tory leader and was a Foreign Minister at some point, started in Thatcher's Government. https://www.telegraph.co.uk/politics/2018/09/10/... William Hague supports May and the Chequers. And right now — JRM's group of Eurosceptic MPs in the House of Commons is growing, that means Chequers is unlikely to pass the vote in the House of Commons, unless May drums up some support from the pro European parties, but they don't like Chequers cause it is not pro EU enough in their view. And the EU's position is a bit unclear as well. Some noises are being made that they might accept Chequers, others say they already rejected it.
Anyway, Rees Mogg's group is favouring a no deal Brexit now with WTO rules, which is a bit scary to be honest.
<nobr>P. S.</nobr> To be honest — Mark Carney is doing nothing but his job. The reason he is talking about the possible crisis and the house market prices crashing — is not to scare monger (although it sounds like that to the Brexiteers), but to prepare the economy. Brexit: Carney warns no-deal could see house prices plunge
The Bank of England's governor has warned the cabinet that a chaotic no-deal Brexit could crash house prices and send another financial shock through the economy.
Mark Carney met senior ministers on Thursday to discuss the risks of a disorderly exit from the EU.
His worst-case scenario was that house prices could fall as much as 35% over three years, a source told the BBC.
The warning echoes some of the Bank's previous comments.
The Bank of England routinely carries out «stress tests» to check whether the banking system can withstand extreme financial shocks.
Its latest one was conducted in November, when it said a 33% fall in house prices could occur in a worst-case scenario.
Several reports said that the Bank governor also told the Downing Street meeting that mortgage rates could spiral, the pound could fall and inflation would rise, and countless homeowners could be left in negative equity.
Speaking on Friday in Dublin, Mr Carney said the stress test was aimed at making sure the the largest UK banks could continue to meet the needs of the country through «even through a disorderly Brexit, however unlikely that may be».
«Our job, after all, is not to hope for the best but to plan for the worst,» he added.
Analysis: Kamal Ahmed, economics editor
It appears that the Governor wasn't providing the Cabinet with a forecast of what the Bank believes would happen in the event of a no deal Brexit. He was briefing the Cabinet on what preparations the Bank was making if that does happen, including last November's stress test.
It was not a forecast.
It was an apocalyptic test where the Bank deliberately sets the parameters beyond what might reasonably be expected to occur. The major banks all passed the test, giving reassurance that the financial system can cope with whatever happens next year.
The Governor believes that a «no deal» scenario would be bad for the economy. But not as bad as the headlines today which are based on a doomsday scenario that is not actually forecast to happen.
In August, Mr Carney told the BBC that the risk of a no-deal Brexit was «uncomfortably high».
That comment prompted leading Tory eurosceptic Jacob Rees-Mogg to call Mr Carney «the high priest of Project Fear», while former minister Iain Duncan Smith said «there is no such thing as a no-deal» and the Bank «struggled to understand how this would work».
Independent property expert Henry Pryor told the BBC that Mr Carney was «not predicting Armageddon, he was not predicting house prices would fall by a third, they are just making sure that if, for some extraordinary reason anything was to go horribly wrong, the bank is prepared.»
But he warned house prices were likely to fall in the first half of the 2019 as people put off buying amid the Brexit uncertainty, while the number of sellers, «driven by death, debt and divorce» would remain about the same.
By the way, Mark Carney ran London marathon in 2015 for Cancer Research (I did it this year for Cancer Research), and his timing was 3 hours 31 minutes - incredible for his age really (he was 50 in 2015), very fit guy — mentally and physically. I don't know why Rees Mogg is so critical of him, people love him in the City.
There was another development today. The EU accepted May's Irish border proposals. Maybe she is not as bad as I thought. She is getting somewhere with the EU, because the EU realizes, that if there is no progress with the deal by the end of this month, which is when The Tory party conference takes place in Birmingham — the Tories will choose Boris as leader and there will be no deal whatsoever. The EU don't want that scenario either (well, so they say). Barnier must have had a real scare after meeting Rees Mogg. Him and Johnson and their pals are determined not to allow the Chequers deal pass the House of Commons vote. So — something had to give, as they say.
Brexit: Theresa May says it's Chequers or no deal
Theresa May has told the BBC that MPs will have a choice between her proposed deal with the EU — or no deal at all.
She was also critical of a plan by Brexiteers to resolve the Irish border issue, saying it would create a «hard border 20 km inside Ireland».
Ex-foreign secretary Boris Johnson said attempts to resolve the issue so far were a «constitutional abomination».
Meanwhile the International Monetary Fund has said the UK economy will shrink without a Brexit deal.
In its annual assessment of the UK economy, the IMF said that all likely Brexit scenarios would «entail costs», but a disorderly departure could lead to «a significantly worse outcome».
Chancellor Philip Hammond said the government had to listen to the IMF's «clear warnings».
The UK is set to leave the EU on 29 March 2019, and negotiations between the two sides are still taking place.
Mrs May set out her proposals for the key issue of cross-border trade after a Chequers summit in July, but it has been fiercely criticised by some Brexiteers who say plans for a «common rulebook» on goods would compromise the UK's sovereignty.
Speaking to Panorama, Mrs May said that if Parliament does not ratify the Chequers plan «I think that the alternative to that will be having no deal».
BBC political editor Laura Kuenssberg said Theresa May calculated that faced with a «binary choice» of the Chequers deal or no deal, Brexiteers would not have the «chutzpah to say 'no way'» and Remainers would decide that carrying on fighting the plan would be too risky.
But the risks are that the PM cannot say for certain what the final deal will look like — and some Brexiteers were already determined not to vote for it, she added.
Mr Johnson's column in Monday's Daily Telegraph renewed his attack on the Chequers proposals and the government's plans for avoiding new border checks on the Northern Irish border.
He criticised the UK's decision to agree with the EU on the need for a «backstop» to avoid a hard border irrespective of a trade deal, saying the issue was being used «to coerce the UK into becoming a vassal state of Brussels».
Downing Street responded by saying Mr Johnson had been part of the government that signed up to the backstop plan.
In her Panorama interview, Mrs May said there needed to be «friction-free movement of goods» with no customs or regulatory checks between the UK and EU on the island of Ireland, in order to avoid a hard border there.
Last week a group of Brexiteer Tory MPs said a hard border could be avoided by using «established» technology and «modifying» existing arrangements.
Mr Johnson refers to the suggestions by the European Research Group in his column, saying that «extra checks done away from the border» would prevent the need for physical checks when vehicles move between Northern Ireland and the Irish Republic.
But Mrs May insisted that any system of checks was «still a hard border».
«You don't solve the issue of no hard border by having a hard border 20 km inside Ireland,» she said.
Former Liberal Democrat leader Sir Nick Clegg told BBC Radio 4's Today programme it was an «insult to the intelligence of British voters» for the prime minister to say it was a «choice between either the Chequers fudge or a cataclysmic cliff edge».
Speaking later at a fringe event at the Lib Dem conference in Brighton, Sir Nick claimed European leaders were «seeking to find some way of giving Britain more time» to avoid a no-deal Brexit.
Brexiteer Jacob Rees-Mogg told LBC the prime minister should «try a bit harder» to get a better deal.
> Therefore — since the Referendum two interest rate rises already took place here — first from 0.25% to 0.5%, then to 0.75%. Such interest rate rises might seem tiny to someone from Russia quoted1
It doesn't seem tiny for me. There's no need to explain it. Btw, here in Russia we also feel it when Bank of Russia rises interest rate by 0.25%. It did it on 14th September (for the first time since late 2014) https://www.vesti.ru/doc.html?id=3060446
> Why should they? I see no point in «no deal» for the EU. It will harm them too. I still think «no deal» is highly unlikely. > quoted1
It is complicated. It depends on what you see as a «deal». Technically — there is no such thing as a «no deal» .Trading on the basis of WTO rules — just like with any other third countries — is also a form of a deal, And as you can see Rees Mogg and the Tory Brexiteers in the House of Commons consider it a better option for the UK than May's «Chequers». And they can easily swing the Tory vote, as there are quite a lot of them. Lib Dems and part of the pro European part of the Labour party also oppose Chequers — for them it is not pro EU enough. So- despite my numerous explanations — I think you fail to grasp the complexity of the issue. Your understanding of the issue is still on the level of that «pup giff» you once posted I am afraid. But never mind — I get it that it is not important to you, so why should you be interested in Brexit. Grin (25771) wrote in reply to post:
> It doesn't seem tiny for me. There's no need to explain it. Btw, here in Russia we also feel it when Bank of Russia rises interest rate by 0.25%. It did it on 14th September (for the first time since late 2014) > https://www.vesti.ru/doc.html?id=3060446 quoted1
The reason I thought that the rates rising from 0.25% to 0.50% would seem tiny to you living in Russia is because the interest rates in Russia are not at the developed world level. They are at the level which we witnessed here some 15−20 years ago. And no, the Bank of Russia didn't raise their base interest rate on the 14th of September for the first time since 2014. The base Interest rate was raised (sometimes hitting double digits!!!) and then went down and then raised again multiple times in Russia since 2014. Because of the sanctions and the crashing of the Russian rouble — the Bank of Russia needed to do that quite a lot to try and stabilize the rouble. Are you sure you live in Russia? Even on this forum there were a lot of threads about it at the time.
> Btw, do you happen to know did your goverment (or PM) ask US to influence EU so their officials could change their stance? > quoted1
It doesn't work like that at all, quite a primitive way of thinking actually. Contrary to the simplistic Kremlin propaganda about the West being in cahoots about everything and the US dominance overrulling everyone's independence. The EU makes economic decisions which are in their interests, the UK makes economic decisions in its own interests and the US — in their own. Sometimes those interests clash quite a lot. Everyone makes their own decisions. Obama administration and Clinton came to the UK before the Referendum heavily campaigning on the pro EU side, threatening the UK that if it doesn't stay in the EU — it will end up in the back of the queue in signing the deal with the US. That didn't prevent Brits voting for Brexit (Obama was still President when that happened, Trump was elected in the US 6 months after the Referendum). Trump is starting trade wars with everyone, including the EU and although respecting May — likes Boris Johnson a lot more and supports his plan for Brexit. UK economic interests are a little bit different from those of the US. UK economic interests — whether one likes it or not — lie in having a close partnership with the EU. They are our biggest trading partner by far. At the same time — the EU is far from an ideal partner as it is a protectionist block that slows down the UK in trading freely with other countries around the world — like the US, Canada, Australia, etc. It is a complicated question. I got to go).