From: fofp@castle.ed.ac.uk (M Holmes)
Newsgroups: alt.peeves
Subject: Re: Get Rich Quickly - Buy A Tulip.
Date: 16 Nov 92 20:26:42 GMT
Organization: Edinburgh University

library@comlab.ox.ac.uk (Gordon Riddell) writes:

>I realise you'll know this Mike (having ploughed through lengthy posts
>on mortgages during the summer, some of which were from you) but

Me? Surely not. :-)

>watch out or he might just accept your offer. In Scotland that's it.

Yeah. I guess that was actually an advantage during the boom. Helps cut
down on gazumping. Unfortunately, as you point out, gazundering is
prevented too.

Times have changed though, a pal of mine was gazumped when he tried to
*rent* a place. Someone bid more rent about half an hour before he was
due to move in. So when he arrived to collect the keys, he found out he
was homeless.

>Here in England's green and pleasant housing market you're best to wait
>until change of contract day, withdrawn your too generous offer, tell
>them you are a completely callous bastard, and offer them 5k less.
>We don't shilly-shally around with this "an offer is final" crap.

I was idly wondering something. I remember way back in the heady summer
of '88, I saw a news story about a guy who bought an option on a tiny
flat in Leeds on a Friday and resold the *option* on the Monday for a
ten grand profit. That being close to the end of Lawson's
multiple-relief holiday, I heard a little bell ring. Close enough as
things turned out. 

What though, will ring the gong at the bottom of the market? I was
trying to list the possibilities:

* When I can buy a house for less than it costs to buy a round?

* When the last house is reposesssed and we all live on the Thames Embankment?

* When the Building Societies plead for *negative* interest rates?

* When you get a free house every time you buy a carpet?

* When there aren't any trees left to make "For Sale" signs?

It's kinda neat in a way. While I was looking into the subject, I read a
bit about previous booms and busts. The most interesting of these has to
be the Dutch "Tulipomania" boom. 

Tulips had just caught on amongst the european nobility and this ushered
in a fad for ordinary folks having them in their garden. Holland was
just the sort of place to grow 'em in bulk and so they had tulip bulbs
shipped over from the mid-east (yeah, I thought they were native too).

Anyway, it got so that yer ordinary common or garden tulip wouldn't do
and lots of folks were trying to make hybrids by some fancy gardening
tricks. They usually had to wait a while to see if the trick panned out
and if they hit lucky, they could get more bulbs of the same sort.
(Don't ask me, I ain't a gardener).

These rarer types got to be kinda valuable and eventually there were
tulip bulb traders in every market. Then there were tulip bulb *futures*
traders where you could bet, or hedge, on the results of the latest
horticultural experiment.

The prices of various sorts of bulbs, and who was trying to grow what
and how much they had made were the talk of diner parties everywhere. 
Tulip bulbs were rapidly increasing in value and it was obvious to
everyone that they could only continue to rise in value. Buying a tulip
bulb and selling it later at a profit was a quicker way to earn money
than just working, and many market traders and businessmen ran a tulip
bulb brokerage on the side.

Of course, if you're going to speculate, then you make more money doing
it on margin (leverage to the Yoosans) and folks began to mortgage their
properties to finance speculation in tulip futures. Eventually, a whole
ten acre estate was apparently traded for one bulb.

There were victims too. On the arrival of a shipment of bulbs, one
trader sent a sailor to collect his "shipment". the sailor was paid with
a fish from the trader's stand. Unfortunately, the sailor's tastes ran
to garnish and there was a funny looking onion just lying around....

The sailor got six months.

Eventually of course, came the reckoning. Despite all appearances to the
contrary, supporting arguments, and the very human ability to convince
ourselves of something we'd dearly like to be so, the market faltered.
Tulip bulbs were no longer going up in price. Those with an interest
began to talk of "healthy breathing spaces" and "a pause before prices
rise ever higher" while quietly attempting to liquidate their positions. 

Tulip prices, of course, fell.

Very rapidly.

Unfortunately there were contracts to be considered. People had taken
out contracts to buy, at a future date, tulip bulbs for say 10,000
Guilders (?). They knew that said bulbs were now worth 1000 Guilders if
they were lucky enough to find a buyer. That way leading to bankruptcy,
they tried to renege. Meanwhile the bloke who had a contract to sell his
bulbs at 10,000 Guilders a throw had recently paid 8,000 Guilders for
'em. He certainly wasn't going to sell 'em at the marjet rate of 1000
Guilders and falling. For the seller too bankruptcy beckoned. The
government of course had been taking a slice in taxes from this boom and
were not keen on the loss of revenue. They determined to enforce
outstanding contracts.  The upshot was that those left holding the
contracts went to jail.

This did not of course, improve the market. Fashion abroad had also
definitely begun to pass the humble tulip bulb by.

It took the Dutch economy 50 years to recover from its encounter with
the Twilight Zone and they lost a slice of empire in the meantime.



So, to answer my own question, maybe the bottom of the market will be
rung when a house is again exchanged for a tulip bulb.....



Peeve: There's nothing that goes up in price forever.

BonusPeeve: There are far too many people still willing to believe that
            there is.

ExtraPeeve: Someone from Holland will read this and correct my faulty
memory. It's a while since I read "Popular Delusions, and the Madness of
Crowds" - a quite amazing victorian book outlining various such
speculative booms. 

FoFP

"People are now making more money from owning a house than they are from
working. Some of them will soon be able to retire on the proceeds.
Society will split into those who are rich by dint of having a property
and those who could not afford to get onto the housing ladder."

     -- A Housing Boom Cheerleader in 1987     

-- 

We wonder why other folks regard computing people as weird while we
persistently refer to small, square objects as "discs".
Newsgroups: alt.peeves