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House Price Crash Forum


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Everything posted by aa3

  1. Imo a lot of fiscally responsible political leaders are living in the past with their concern for restraint. Like the worst example being the German political leaders. Their fiscal conservatism worked very well over the last decade and they deserve credit for staying disciplined. But the game has changed imo, when industrial orders fall by 33% its not the time to be worrying about balancing the budget. On the contrary their earlier fiscal discipline allows them room to manuevre now. China imo has done the best at this, they amassed great reserves over the last decade. And now their stimulus package was nearly 20% of GDP, with talk of more. If Germany did the same their stimulus package would be like 400 billion euro. Things would be looking a lot more hopeful in Europe if that kind of money was hitting the streets(and I'm not talking throwing it down the black hole to the bankers). Actual stimulus like tax cuts, rebates, new government spending. Add in France, Belgium, the Netherlands, Austria and co doing the same say another 400 billion euro together and that would be a huge boost in spending coming.
  2. I believe with nuclear weapons the great powers won't fight each other. But imo we could see the great powers in frustration going and punching the weaklings on the block.. Aka smaller nations like Iraq. As painful as it is for me to admit one bright spot of having the government in so many areas of economic life is that it can stimulus spend outside of just the military. It can give hefty contracts to insiders besides just buying tanks.
  3. I agree completely with that academic. The economy in today's age is so chaotic compared to the past. Whereas someone would in the past get a union job somewhere and work there until pension gradually earning more money.. that era is gone for most people. Today people can make more money than ever, but a job or contract often only lasts for 1-4 years. And today people have to chase down the opportunity its not just being a cog in a machine. Look at software, once they do the brute force programming and finish the job, often that is it. It also throws a monkey wrench in the idea of a 25 year mortgage.. when a growing percentage of people have no idea how much money they will make next year, let alone 20 years from now.
  4. Its so stupid when everyone thinks their property is special and won't go down, even when they see other places going down. This guy I know it seems like he honestly doesn't care about prices, he just wants to accumulate more and more properties over time. In fairness hes long retired, so running his mini-empire is what he does all day.
  5. A guy I know, a rich UK former industrialist and property investor in the UK and Florida.. Said about a month ago he bought a house in Florida for 50,000$ directly from a bank, that went for close to 600,000$ at the peak. But it sounded like the property was damaged to some level and would take like 25,000$ to fix up for rental. Btw this guy didn't sell any of his UK or Florida properties at the top, so his net worth has to be getting hit.
  6. Actually they are right on this one. The world needs China, Japan and Germany to go on a spending spree. Cutting taxes in Germany hugely and deficit spending would be a big help. China in fairness is doing exactly the right thing. A massive stimulus package, at nearly 20% of GDP, and already talk of more stimulus spending. I will note unlike everybody else going downhill, the Chinese numbers coming out are actually looking pretty good. I have argued in other threads Japan should be looking at a stimulus package of around 1 trillion USD.. 20% of their GDP. Japan could send £4,000 to every man, woman and child in the country. Germany I believe should spend an additional 600 billion on top of their federal budget. Not the tiny stimulus package of 30 billion or whatever Germany was talking about. By being conservative with their finances right now Germany and Japan are killing their own customers, and forcing actions like protectionism and inflating on the deficit countries. The US lowering rates to 0%, and the coming printing is a way to put the yen through the moon and force the trade deficit closed the hard way. The easy way is if the Japanese go on a spending spree on themselves.
  7. It restores my faith in the world to see a man this smart running a whole country. This is like commentary from an austrian economic analysis about real production and curbing speculation.
  8. I think the stimulus package is too small. If I was in charge I'd try for more like 3-4 trillion. Add to their current plan, 3,000$ cash for every American citizen; man, woman and child. That would cost 900 billion. Instead of 100 billion for the states, I'd spend more like 400 billion to them, to spend how they want given purely based on population. California with 12% of the US population would get 48 billion, which would close up its budget gap for now.
  9. Youth unemployment at 29.5% this early in the crisis, wow. The young adults in a civilization have the most important task of all, giving birth to and caring for the next generation. And they need to be able to accumulate the money and property to make that possible. If in a failed state the young are not able even to get into the job market, let alone make high amounts of money in their youth.. Then the young need to violently overthrow the current ruling elites.
  10. I think some might be takign their cynicism to an extreme in saying capitalism and communism are the same. If that was true you wouldn't care whether your family were sent to be citizens in North Korea or South Korea. In fairness I started with an extreme statement, the end of widely held public capitalism. What I really mean is that style believe it will diminish in importance. Like it is said the center of capitalism is on wall street and the city of london. In privately owned capitalism it will be more like Mittal Steel one of the largest corporations in the world.. ran from a palace in Luxembourg.
  11. Really glad to see you guys doubting all the fear mongering of the powers that be.
  12. Note I'm not saying the end of capitalism, just a form of ownership popular in the 20th century that seems to be failing now. The widely held 'public corporation'. As for the state, I think in western europe it is another bubble that will burst sooner or later. A century ago Britain was spending 5% of GDP on government, and this while running a global empire! Western European nations were spending between 3 and 7% of gdp. Fast forward to today, and western european nations are spending in some cases 60% of their economies through the government! I'm not an anarchist capitalist, I believe the state plays a useful role, and even can buy into an expanded role for the state in the modern age. But today the state in western europe has grown so it is in everything. It is quite easy to see how government could be reduced to 30% of economic activity while still easily providing health care, and help for those in need, and those old fashioned roles of the state; law and order. I'm talking actual law here, enforcing contracts as written, stopping theft and trespass. Unfortunately it seems unlikely to me that states are going to voluntarily cut back.. like humans must do it seems it will be pushed and pushed until the brekaing point is hit and it collapses brutally. Then built anew with a fresh start.
  13. Agreed.. I think all the surplus countries need to start mass stimulus spending. China has led the way with their stimulus package being something like 20% of gdp. And a good sign is their leaders are already talking about more stimulus..And we see the results the Chinese economy is still doing fairly well, put in 7.8% growht last quarter, with early numbers for this quarter looking even better. For Japan that would be about the 1 trillion USD I talked about. Also Germany should start stimulus spending.. I think since they were running the biggest trade surplus of all last year, they could do a stimulus on the order of ~700 billion. Germans citizens and governments need masses of money in their hands so they can start consuming, especially goods from foreign countries. That would help out all the places that were running deficits, like their fellow EU nations. Germany and Japan have earned the right to go on a spending spree with their great surpluses they have been running. Ironically it is them who are refusing to spend in this period, on themselves. I think the USA is right to bring interest rates to zero and start spending hugely.. If the Japanese and Germans and co are still going to purchase treasuries at 0% return.. the federal government might as well go on an unbelievable spending spree. Devalue their other holdings if they won't stimulus spend themselves and buy American products. By doing this they are forcing the Yen to the moon in value, and crushing Japan's ability to export. Which is the other way, the painful way to close the trade deficit.
  14. Hehehe great find InternationalRockSuperstar! Looks like GordonGekko recognized and beat me to the point a long time ago! I find it interesting the great development going on in India is being driven by industrialists that remind me a lot of those American industrialists like Carnegie, Dupont and Rockefeller.
  15. I may have caught an especially virile version of that virus.. But I think the cheques last year the Japanese sent out were so small it wouldn't make much difference. Like maybe £100 per person. I am talking sending £5,000 if necessary.
  16. The unearned part is big, as I understand it is especially big in Japan where the thought of someone getting money without working is especially hated. I was thinking they might be able to get around that by giving like £2.50 an hour compensation for every worker in the country, up to a maximum of 2,000 hours a year. Funded right from the federal central bank directly to the workers bank accounts. I agree with you it would be insane if there was inflation to flood the country with money like that.. but in a deflationary depression, the added money is needed just to keep prices level. I think it can improve the wealth of the country, lets say video camera factories are shutting down because people don't have neough money to buy them. That is a lot different than zimbabwe where real capital the farms were destroyed and the government is flooding the country witht he money in the face of declining ability to produce as much as before.
  17. Imo Japan needs to do massive federal stimulus spending. If I was them I'd start sending out cheques to every Japanese person, man, woman and child until eventually the Japanese started spending. I think countries like Japan not just facing, now in a deflationary depression, are going to have to start stimulus spending on a whole new level not even imagined yet. Like imo a 1 trillion USD package for Japan, a nation with a GDP of about 4.6 trillion USD.
  18. I think what you are complaining about is debtalism. Like one guy through years of labour saves up enough to purchase capital. On the other hand some high flying hedge fund manager borrows 30 times his capital and bids up the same capital in speculation putting it out of reach of average people. When speculators using newly created debt money drive up home prices 3 times, while income stays the same it is not beneficial to society. On the other hand when a farmer saves up for years and purchases a piece of farm equipment that greatly increases his productivity that seems to me to be a benefit to society. Or to use a communist term when a farmer invest his own labour or capital and brings into cultivation waste land it seems to be a net benefit for mankind as now more food is available. I believe in debt-free fiat money. Where the government spends into the economy more than it takes in, an amount to keep prices about the same to keep up with rising population or productivity.
  19. I think many of us bear types sort of emotionally thought for many years, that the bankers and co would steal the boomers pension investors before they had to pay out. I personally have no pension promised to me. I always thought no I will take the 15% of my income and invest it myself and just accept all the tax losses and such up front. Instead of giving 15% of my income for life for a promise to pay far down the road. On the other hand a good example of private ownership is people's personal home. Many older people own their home outright. And that is not easy for any authority to take away from them.
  20. Thanks I had been lurking on blogs like calculated risk since around the start of 2007. I got more and more afraid when people would link bearish analysis of the banks balance sheets, and I myself brought up the balance sheets and looked at them. One thing that made me afraid was looking at a bank with 1 trillion pounds of assets, and earning a profit of 5 billion pounds. I thought that reward just doesn't justify that insane risk. A 20% move down in the value of assets would wipe out 40 years of profits. Of course I would have made insane money if I had gone short at that point on banks.. but I don't like shorting as I don't trust my timing, the market seems to be able to defy reality a lot longer then I think is possible.
  21. I look at collapsing stock markets and wonder if it will ever come back. I mean shareholders seem to have no say over what management does, namely spending more and more money on management. At some point there seems to have been a coup, where public companies are ran by management, for management. The banks taking reckless risk to have astronomical yearly bonuses with no regard for the long run, is the perfect example of this(even giving huge bonuses as their shareholders are wiped out). We see at the end the common shareholders lost their wealth, RBS stock from 600 to 21 over the last few years. The companies even have unknown amounts of billions in off balance sheet assets and liabilities. Even sophisticated investors have no idea what the real financial condition of the company is. Would you buy a small business from someone in your town if you didn't know what was on its balance sheet? Even the bond market seems to me to be in long term jeopardy. Even the legal rights they used to have as senior creditors, governments are cancelling those rights after the fact. The most senior creditors in companies like GM could have recovered their principle, but the government is forcing cramdowns where they accept a lower amount. So is it the end of capitalism? No, capitalism has gone on for thousands of years. In fact the widely held public company as a key way to invest money is a new phenomenon of the 20th century. Historically capitalism was about private ownership. The industrialists of the 19th century were actual owners of their corporations. Corporations weren't ran by management for management, but for the owners. Debt and bond issues worked differently too. A very wealthy creditor may lend the equivilent of 100's of millions today, but in exchange the debtor would transfer the deed of property to the possession of the creditor until which time the debt is repaid. If the creditor could not take legal possession of collateral, they simply would not lend. Obviously in a widely held bond issue this is not possible. For me personally I sold all my stock investments in mid 2007, and spread my money out in currencies I felt would do well. And at first I thougth I'll wait til the stock market crashes and then buy back in down the road. But on reflection I have thought why would I trust my money to management I have no control over. It seems it will always be a ponzi scheme. I am now thinking if one day I see attractive investments in the UK, and, any investments I make will be in my own name with me holding at least 51% of the voting shares in any arrangement. Such as purchasing a shopping center in my own name. Yes I happen to like shopping centers if the prices were far lower than today.
  22. The money will obviously be gone in 6 months. I'd recommend to any of you out there invested in funds, read the entire contract for any fund you invest in. And if you see any clauses where they can freeze your redemption at will, I'd get out.
  23. It is an epic fail that the printed money is transfering into the cost of goods, but not into the hands of the average person to increase their spending.
  24. That would be easier said than doen in a fractional reserve system I think. Look at what happened over the last 10 years. A gargantuan amount of money being created by people taking out ever larger mortgages.. yet outside of housing there wasn't much inflation. So the money creation was about right. That level of debt money would have had to be created in some other part of the economy.. namely the other ones being consumer debt wh ich is only 1/4 of mortgage debt, corporate debt which is about the same size as mortgage debt and government debt which seems a fair amount smaller, and commercial real estate which is about 1/3rd the size of the personal mortgage market I believe. It woulnd't make sense for corporations to borrow more than they did. So the money would have had to come from massive government borrowing. Another theory might be if people were paying say half as much for housing, that they'd have substantially more to spend elsewhere. And I bet if they are spending in the consumer economy the velocity of money is much higher than paying down huge mortgage payments. If the velocity of money rises 50% only 2/3rd as much money is needed in the system to have the same prices. Think about this example; if a young couple is paying 60% of their income towards housing expenses now.. but the price of housing was smashed so the young couple only had to pay 30% of their income towards housing expenses. That would increase their income to spend on everything else by a remarkable 75%! As their non-housing expenses would rise from 40% of their income to 70% of their income.
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