Venger Posted November 16, 2014 Share Posted November 16, 2014 When rates are cut to zero then it would be better to hope to hell that you had already loaded up on (I would still say, given the future was unknown at that point, responsible levels of) debt while interest rates were high and asset prices were low, which can now be inflated away / paid down in a low interest environment. Waiting for asset prices to take off under ZIRP before buying is a foolhardy gamble as anyone making it would then need to time the market just right in order to get out without losing their entire position and more (how many people think they are doing this now, in London prime, only to find their property is not selling into a stagnating market?) Loose credit is the primary cause of this situation, ZIRP is a part of that but other kinds of loose credit existed beforehand and asset prices had already taken off way before ZIRP was introduced. I suspect the best time to get out of property was about six months ago... The yield chasers, and those taking on even more debt into low-rates.... had better time it right, as you say. Too many lulled into false sense of security... will they find the upsizers. Limited supply onto market has kept prices up at the margins, but there are the beginnings of unravelling... signs of distress at mid-prime... teaser rates cut to 0.99% on 2 year deals... trying to find last of the willing/able buyers. The UK scores literally zero – a legacy of decades of growth containment planning commenced in 1947. There is an absolutely undeniable correlation between the introduction of growth containment policies, and unaffordability of housing – in the UK, California, Canada, Australia, New Zealand, Sweden, France, everywhere I look. There has been a global mania in growth containment in more recent decades, you have to be dead from the neck upwards not to know this. Wonderpup's happy debtors too... loading up on debt, into happy deflation - banking on experience that savers take the brunt of the pain, and just load up more debt onto Gov's books for the unborn, with no cuts/tax rises etc ever coming in imminent future. No forgiveness. Hold the line into what is coming. We've had our share of it, against others market view of forever crazy hpi. Low rates perversely reduce consumption and increase savings, as lower returns force people to set aside larger amounts for future needs. Quote Link to comment Share on other sites More sharing options...
evetsm Posted November 16, 2014 Share Posted November 16, 2014 You would be an even bigger fool if you put your savings into something that lost it's value due to market movements even if the savings were alongside borrowed money and especially if it was pension savings. Isn't it akin to that thing they call being whipsawed - you lose both ways. Of course sometimes it's difficult to win whatever especially when in competition with those first in line for receiving QE money. sure you can ride your luck and attempt to time it exactly. But the prudent man may say , in bubbles of this size, better 5 years early than one day late. Quote Link to comment Share on other sites More sharing options...
Neverwhere Posted November 16, 2014 Share Posted November 16, 2014 No forgiveness. Hold the line into what is coming. We've had our share of it, against others market view of forever crazy hpi. Quote Link to comment Share on other sites More sharing options...
Venger Posted November 17, 2014 Share Posted November 17, 2014 Hehe - Red Alert. Radio in the kitchen just now, reporting newspapers of today ... where David Cameron said, "The red light is blinking on the dashboard of the global economy" - which some economists are interpreting as the world facing another global recession. A paper I read some years ago looked into how so many politicians, since President Hoover, have liked to encapsulate problems in the economy as being simple fixes with mechanics like a car where they have the necessary skills - ease of consumption to get message across - impression of politicians having easy fixes and control. Noticed Osborne doing it in 2008-2010. Perot ran as an independent..metaphors about the political system as an engine, which he would duck "under the hood to tinker with" - ... engine of the economy.... [..]like Hoover, was also a protectionist. Common features of all stimulative initiatives that involved little but income redistribution without a substantial investment component targeted to bring in a return of revenue, is that they expand government debt. This runs down the national balance sheet, increasing the debt service burden without increasing the capacity. In logic, this means a deeper depression in the end. Quote Link to comment Share on other sites More sharing options...
billybong Posted November 17, 2014 Share Posted November 17, 2014 "The red light is blinking on the dashboard of the global economy" Use the warranty. Quote Link to comment Share on other sites More sharing options...
chronyx Posted November 17, 2014 Share Posted November 17, 2014 Or just ignore it as most drivers seem to do. Quote Link to comment Share on other sites More sharing options...
Saving For a Space Ship Posted November 17, 2014 Share Posted November 17, 2014 Hehe - Red Alert. Radio in the kitchen just now, reporting newspapers of today ... A paper I read some years ago looked into how so many politicians, since President Hoover, have liked to encapsulate problems in the economy as being simple fixes with mechanics like a car where they have the necessary skills - ease of consumption to get message across - impression of politicians having easy fixes and control. Noticed Osborne doing it in 2008-2010. Lenders Can Now Disable Your Car When You're Driving on the Freeway http://www.alternet.org/subprime-lending-car-buyers-fueling-bubble Quote Link to comment Share on other sites More sharing options...
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