Chinese currency devaluation

scorza · 16 Oct 2015 at 20:10

Sone said:
The Welsh, won't someone think of the Welsh

I didn't think there were any steel industry redundancies announced in Wales today, but yeah they need protecting as well imo.

FishFluff · 16 Oct 2015 at 20:34

scorza said:
One of the main reasons is the price of Chinese steel exports thanks in no small part to the devaluation I mentioned in the OP.

The devaluation of the Yuan has very little to do with UK steel plants being closed. The Chinese have been offering cheaper (and according to everyone I know who works in engineering, crappier) steel for years now.

Abraxaz1 · 16 Oct 2015 at 20:40

Sone said:
The Welsh, won't someone think of the Welsh

If port talbot closes south wales will become even more desolate, I used to work there and can tell you the moral is 6 feet under...

The government doesn't want people in heavy industry they want to drive down wages and get everyone in the service industries.

George Hincapie · 16 Oct 2015 at 20:44

cheesyboy said:
It's not really sneaky - if they had a properly floating exchange system, it would have devalued on the low performance of exports anyway.

As for UK house price crashing: it's pretty silly to be yearning for such a thing. Lower house prices would be preferable (probably achieved with an increase of supply: i.e. buildin gmore houses), but a market crash is really not a good thing

The market won't crash, it'll stagnate. People just won't sell and there will be fewer properties on the market so prices will actually increase.

As long as the mortgage costs can be met there is no pressure on home owners to do anything.

Zethor · 16 Oct 2015 at 21:02

George Hincapie said:
The market won't crash, it'll stagnate. People just won't sell and there will be fewer properties on the market so prices will actually increase.

As long as the mortgage costs can be met there is no pressure on home owners to do anything.

I recall quite a few economists who were saying the same things about the US real estate market in 2006. One thing is certain, there's a housing bubble in some parts of England, the only unknown is whether it will burst or just slowly deflate.

muon · 16 Oct 2015 at 21:05

Almost zero interest rates and QE is also currency devaluation. Didn't hear the Chinese complain.

I'm not sure I see the problem. A key part of monetary policy is to control the exchange rate.

If it was really the wrong thing to do, they would have been punished by high inflation.

alx · 16 Oct 2015 at 21:50

Zethor said:
I recall quite a few economists who were saying the same things about the US real estate market in 2006. One thing is certain, there's a housing bubble in some parts of England, the only unknown is whether it will burst or just slowly deflate.

Where is there a bubble out of interest? Isn't most of the house price increases almost purely due to high demand and lack of supply? Unless people move to different areas of the UK I can't really see this changing.

Zethor · 16 Oct 2015 at 22:45

alx said:
Where is there a bubble out of interest? Isn't most of the house price increases almost purely due to high demand and lack of supply? Unless people move to different areas of the UK I can't really see this changing.

The demand is indeed high but it's driven by greed along with housing needs. Many investors, particularly foreign ones in and around London, have been pouring money into the market to get a piece of a pie (growth) rather than to satisfy housing needs. Take a look at a growth graph and you will see why it is unsustainable in the long term.

McPhee · 17 Oct 2015 at 10:59

Scam said:
Will this force us to raise interest rates quicker and then cause a much needed housing market collapse? If so, I'm all in!

A modest rise in interest rates (back to historic norms) isn't going to cause a housing crash. Between government policy, cash buyers, high net immigration and insufficient housing stock, prices are pretty certain to keep rising through to the end of the decade. Beyond that, it's too early to say.

Short of a rapid u-turn in government policy, or another financial crash which knocks confidence in the housing market, prices are only going to rise for the foreseeable future.

aardvark · 17 Oct 2015 at 11:43

alx said:
Where is there a bubble out of interest? Isn't most of the house price increases almost purely due to high demand and lack of supply? Unless people move to different areas of the UK I can't really see this changing.

supply and demand doesn't really work like that for houses because rarely people buy for cash - house prices are driven by available credit. because of near zero interest rates and international markets we are in a credit bubble, have been in one for a while - the 'crunch' was not really a crunch and was 'corrected' simply by pumping the system full of more available money.
sure that did stop most banks from collapsing but the side effect (in this country at least because people are stupid enough to think house prices only go up) the money found its way into houses.

it will of course end in the future, but not soon, and not in a pleasant way.

imo of course

McPhee · 17 Oct 2015 at 12:48

Houses are rarely bought for cash?

http://m.huffpost.com/uk/entry/7499994

38% of houses in Q1 2015 were bought for cash, up from a 2014 average of 36%. Downsizers, BTL and investors often buy with cash, even with today's low interest rates. In part, this is why an interest rate rise won't crash house prices and why, going forward, rate rises and availability of credit will have a diminishing impact - the number of houses with an outstanding mortgage is dropping all the time.

D.P. · 17 Oct 2015 at 12:53

Even people who dont buy outright with cash may get as all mortgage and be less affected by interest rates and houses prices. We put 50% in as a downpayment, several friends purchased houses with 40-70% down.

aardvark · 17 Oct 2015 at 16:00

satchef1 said:
Houses are rarely bought for cash?

http://m.huffpost.com/uk/entry/7499994

38% of houses in Q1 2015 were bought for cash, up from a 2014 average of 36%. Downsizers, BTL and investors often buy with cash, even with today's low interest rates. In part, this is why an interest rate rise won't crash house prices and why, going forward, rate rises and availability of credit will have a diminishing impact - the number of houses with an outstanding mortgage is dropping all the time.

thats me surprised then.