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World Braces As Deflation Tremors Hit Eurozone Bond Markets


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HOLA441
1
HOLA442

For lots of people a job is not necessary as their house earns more than they do .... and it is all tax free. Just release some equity, spend it and the money will magically re-appear via the HPI ATM machine. Can't see any problem with this going forward.

Either Osborne keeps borrowing and printing and drives the UK into a runaway debt spiral, or he stops borrowing and printing and lets the UK fall into a debt de-leveraging depression.

There is no upside.

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HOLA443

Either Osborne keeps borrowing and printing and drives the UK into a runaway debt spiral, or he stops borrowing and printing and lets the UK fall into a debt de-leveraging depression.

There is no upside.

The longer he keeps up the "either", the worse the inevitable "or" will be. But he doesn't care about the economy, it's all about re-election.

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HOLA444

Either Osborne keeps borrowing and printing and drives the UK into a runaway debt spiral, or he stops borrowing and printing and lets the UK fall into a debt de-leveraging depression.

There is no upside.

buying less...now that leads to reduced prices...and it does come to an end when people have to buy.

Buying the same for more...now that is obviously not good...and it doesnt come to an end until people start dying.

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HOLA445
But he doesn't care about the economy, it's all about re-election.

Which just serves to demonstrate how deeply pathological the lust for power really is- a truly sane man would run out of a burning building, not into it. Osborne must know that the current house of cards will collapse soon- yet he wants to be in office when it does? :blink:

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HOLA446

the world doesn't have a deflation problem.

it is quite plain that the west has a regulatory problem(ie incessant meddling and micromanagement)..OR, FWIW...Cold dead hand of the state too damn big.

THAT is what is CAUSING the deflation.

get out of our lives...that's the solution.

eat local, grow local, generate local....in a word...decentralise.(completely the opposite of what they have been guiding us towards)

I don't own a wind turbine because I'm green..I own one because I don't want to be beholden to some energy mafia/cartel.

likewise with transport etc...we need to get inventive.

somebody make a nice efficient LPG turbine engine for all of those lorries and I will happily supply them bottled farts from my ingest of beans and vegetable matter.

better still, we make a community parp-stop in each town, where said journeymen can re-fill and refresh as they go about their commerce.

Edited by oracle
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  • 1 month later...
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HOLA447

Pretty basic below; was in WSJ... mirror of story link below. House prices here need all-enveloping hyper-deflation. Too many older owners living in HPI dream-world cosy luxury perpetual fantasy decades with their £300K-£1m+ houses.


Deflation poses risks to global house prices: QNB
December 07, 2014


[..]The recent sharp decline in commodity prices has significantly dampened the outlook for global inflation with rising risks of deflation, particularly in the Euro Area. This is likely to have a negative impact on global house prices. Falling goods prices can feed through to asset prices leading to expectations of further price falls, creating a downward spiral of asset price deflation.

In 2013-14, the recovery in UK and US housing markets has strengthened. Low interest rates and policies to support the housing sector have helped. However, rising price increases have raised concerns about potential overheating.

IMF analysis suggests that the UK house prices may be overvalued by about 30 percent when compared with long-term average incomes and rents. At the same, the IMF assesses current US house prices to be broadly in line with fundamentals.

Deflationary pressures, however, could impact markets in the UK and the US as well, notwithstanding their relationship with fundamentals.

In most EMs house prices were relatively resilient to the impact of the global financial crisis and recession and have been rising steadily over the last few years. However, the slowdown in EM economies in 2013-14 has dragged down housing prices and led to a slowdown in price growth.

China is of particular concern. The increase in real house prices slowed from 16.3 percent in the year to Q4, 2013 to 5.1 percent in Q2, 2014 and real prices actually fell 2 percent in Q3, 2014. This suggests that the Chinese real estate market could be nearing a crunch point.

A sharp correction in property prices could lead to an increase in defaults, risking a crisis in the overextended shadow banking system. Measures to constrain credit to the real estate sector and restrict speculation appear to have taken some heat out the market, but any further house price declines going forward could have significant repercussion on private consumption and the banking sector.

In summary, global deflationary pressures add to the risk of a correction in house prices in 2015. In some countries, particularly in the eurozone with slow or negative house price growth, the risk of deflation and a downward spiral in house prices is rising. In other countries where a recovery has taken hold up to now, there is a risk that real estate markets may be overvalued and a destabilising correction could be around the corner.

http://thepeninsulaqatar.com/business/qatar-business/310562/deflation-poses-risks-to-global-house-prices-qnb

Elsewhere...

Bill Blain, a fixed income strategist at Mint Partners argues that lower oil prices does not necessarily translate into growth, however. "Oil price declines are initially hailed as positive growth drivers – but in an already recessionary environment, perhaps they have become a soporific too far?," he said in a morning note on Friday. "I am just not perceiving the global economy on the verge of a boom...the risks look to the downside – especially as the effects of lower oil are factored in."
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HOLA448
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HOLA449

That is the thing......the world doesn't need QE.....the world is interdependent, what one bit does affects the rest......only some bits need continuing lumps of available stimulus, and continued inflation to kill what was spent yesterday....leaving those that don't require propping up to get wealthier on less...QE slowly kills prosperity.

we'll see just how interdependent the world really is when the mad mullahs start blowing up all those pipelines in the ME..or worse still, start unleashing some of those nasty biological weapons they've been hoarding.

it isn't interdependent, it's over-dependent.

even for the likes of china,whose economy depends almost totally on exports...you can't export much when everybody has gone down with the flu...china/russia/germany then get a economic crippling.

everything from all the minerals in africa needed to make the nuts and bolts for the chinese workshops to stick everything together with.

and then, there's food.

that's why it's such a feckin stupid idea to for labour to cram the place full of people on such a small island.

either they are crassly incompetent(in which case they need locking up)

or they know what they are doing and doing it deliberately(in which case they need executing)

Edited by oracle
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HOLA4410

that's why it's such a feckin stupid idea to for labour to cram the place full of people on such a small island.

Makes plenty of sense if you are Liblabcon with one eye on your ponzied retirement benefits and the other eye on your property portfolio. Have a heart for their future even if it screws up yours.

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HOLA4411

The fracturing energy bubble is the next housing crash.

http://davidstockmanscontracorner.com/the-fracturing-energy-bubble-is-the-new-housing-crash/

Here’s the point. In an honest free market for debt and capital there would have been no MEW eruption [ ]... The incipient boom in mortgage credit would have throttled itself. That is, had the Fed not had its big fat thumb on the price of debt, interest rates would have soared, and American households would have been incented to add cash to their nest eggs, not strip mine the equity from their homes.

And that leads exactly to the next bubble——the energy boom that is now hitting the wall. The trillions of MEW that US households falsely extracted from the inflated equity value of their homes did not stay within the confines of a closed model US economy. Instead, over the decade or so before the financial crisis a goodly portion flowed into demand for shirts, shoes, electronics and other gadgets from Mr. Deng’s export factories in East China.

And during that debt-fueled US consumption boom, interest rates did not remain low because the workers in China’s new sweatshops had an outsized appetite for savings, as per the sophistry spewed out by Greenspan and Bernanke. No, it was the People’s Printing Press of China that had an humongous appetite—–that is, for mercantilist economic growth obtained by pegging their exchange rates at artificially low levels in order to keep their export factories booming.

So countering the Fed’s fat thumb on the domestic cost of debt in the US, the PBOC keep its thumb on the RMB exchange rate, thereby flooding its domestic economy with the most fantastic expansion of credit fueled investment in industrial capacity and internal infrastructure that the world had ever seen. Between 2000 and 2014, China’s credit outstanding soared from $1 trillion to $25 trillion. Consequently, its credit swollen GDP expanded from $1 trillion to $9 trillion in a comparative heartbeat; and its crude oil consumption soared from 2 million barrels per day to 8 million.

In short, the Fed exported bubble finance to the entire world, but most especially China and the EM. The upshot was an extended era of booming but phony global growth, and a consequent artificially high oil prices at $115 per barrel.

When central bank inflated oil prices were coupled with lunatic junk bond yields in the US shale patch at barely 300 bps over the central bank repressed yield on the US treasury note, the result was the same old bubble thing. Namely, a half trillion dollar flow of high yield bonds and loans to the energy sector, and a wholly artificial explosion of US shale liquids production from 1 million to more than 4 million barrels per day.

Like in the case of the housing bubble, the energy boom was an accident waiting to happen— testimony to another even grander experiment by the madmen running the world’s central banks. It is now exploding right on schedule. The plunging graphs subsequent to the housing bust are now being re-gifted to the energy patch and all the bloated, unstable chains of finance and real economic activity which flow from it.

Edited by zugzwang
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HOLA4412

All that matters is that the rich stay rich (or get richer).

You can just imagine how fiercely cabinet/MPC/Fed/ECB/IMF/secret banking cartel meetings are debated. All those in favour of the rich staying rich raise their hands. All those in favour of the rich getting richer? Motion carried.

Edited by Steppenpig
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HOLA4413
central banks are not doing enough, either in the West or the East to offset the decline,' warns CrossBorderCapital

What happened to all that stuff about how the free market should be left to do it's thing without interference?- these days not a day passes without some group of 'capitalists' demanding a central bank fix for something or other.

I vividly remember a red faced Jim Cramer in 2008 practically screaming 'This cannot be allowed to happen!' as the market was falling off a cliff- I often wonder who it was he imagined could-and should- have the power to stop the market doing what it clearly wanted to do.

The road to Damascus was crowded with born again keynesians that night- nothing but market interventionists as far as the eye could see. :lol:

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HOLA4414
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HOLA4415
Cramer.: 'Open the discount window. We have Armageddon. 14 million people took a mortgage in the last 3 years. 7 million of them took teaser rates or took piggyback rates. They will lose their homes-this is crazy!'

At least he's honest with his VI. It was very similar on hpc and still is. His rich trader friends might spill some of their hpi on houses with fortunes in equity, if more recent buyers lose out.

Reading zugzwang's link above of all the $ Trillions in credit expansion year 2000+ and still today awarding victim status to those paying very high prices. Fact is, you choose to defend HPI for everyone else with excuses, including longtomsilver's sisters, and especially all the outright no-mortgage majority who all too often are the biggest cheerleaders to younger people to pay higher prices, so their own homes go up even more in value.

My sister is totally sucked into the property can only go up mantra despite failing to sell her £1.1million 3 bed house on Peckham and I might add she's a reluctant landlord herself after failing to find a buyer for their (husbands) flat in Peckham.

both of my sisters will criticise me now and try and make out that my points aren't valid. .. Their reason... that that both love in £million houses so they are wiser/cleverer than I. Honestly they've used that one before ignoring the fact that they are skint all the time whereas my own family not saddled with debt debt run on a huge surplus every month (~£4k fudge money). Whose happier me I bet.

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