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dellboy

Do The Banks Want A Crash Or Do They Want A Soft Landing?

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Hi,

I'd appreciate any insights into the following:

Scenario A: The decent (business-wise) mortgage lenders will have a good deal of deposit and initial payments to scratch with each default. If they can unload the defaulters and get the crash over quickly, then they can get back to a steady rising market with a higher mortgage turnover again.

Scenario B: Alternatively, they can renegotiate payment terms to prevent defaults while the FTB pool goes dries up, equity withdrawal stops and the mortgage approval rate plummets. They keep this up for 10 years while the housing market has a "soft landing". Gradually, inflation brings the relative prices down and FTB start to trickle in.

Question 1:

Do banks make more money out of a stagnant housing market with inflated prices (soft landing) or out of a fast-rising market with more realistic prices (crash)?

Question 2:

Bank B1 has a high number of potential delinquencies and bank B2 has very few. Prices are high. Mortgage repayments are going up. B1 is in trouble relative to B2. Does Bank B1 want Scenario A (fast crash) or Scenario B (soft landing)?

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The financial system as we know it THRIVES on volatility.

that's why we now have instruments like shorting,hedge funds and so on.

the whole shabang is designed to be unstable.

those who don't understand this are going to be destroyed.

so soft landing??????

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Central Banks have two goals

1) Create inflation, to transfer wealth from the masses to the elites ruling the world

2) Hoodwink the masses into believing there is no inflation

Their main tools are

1) Legal tender laws and unredeemable paper money

2) Total control of the money supply and interest rates

Until the masses understand this and ask a return to honest money, they will create booms and depressions under the direction of the elites, which will always be positioned in advance to benefit.

correct,it's higher basic inflation...stemmed by lower wage/consumer inflation.

the flip-side of this is there will be higher than expected inflation in the emerging markets....more buying power.

...for the masses to really get to grips with mean inflation will take them some time...but they will get it.

they already know that their pay-packet doesn't stretch as far as it used to.....if it gets THAT obvious then the next step is an attempt to redress it by higher wage demands....if that fails,civil unrest.

that's the way it's gone for many a year.

the antidote to this is a diversion...typically war,but now terrorism will serve as a good subsitute or maybe additional.

Edited by oracle

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Central Banks have two goals

1) Create inflation, to transfer wealth from the masses to the elites ruling the world

2) Hoodwink the masses into believing there is no inflation

Until the masses understand this and ask a return to honest money, they will create booms and depressions under the direction of the elites, which will always be positioned in advance to benefit.

personal observation, but you spoil some of the excellent posts you make with nonsense like this - very similar to RB who spoils his posts with ridiculous statements about GC2 and poisons in the mud

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personal observation, but you spoil some of the excellent posts you make with nonsense like this - very similar to RB who spoils his posts with ridiculous statements about GC2 and poisons in the mud

can't see much wrong with the OP opinion TBH <_<

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Yup - volatility makes profits for smart money [and losses for the idiot money]

If anyones played with spreadbets - the WORST thing that can happen is the market is stagnant. Neither up or down. You lose because theres a opportunity cost in time - i.e your funds are tied up not doing anything- closing out means you lose automtically on transaction costs.

If you go long and the market moves up, you make money.

If you go long and the market goes down, you lose - BUT at least the trade is over, and the next opportunity is seized.

I m going for Big Boom and Big Bust.

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The financial system as we know it THRIVES on volatility.

I think banks thrive on sentiment. Mostly on positive sentiment. They need fools to be overexcited and borrowing up. Blowing their savings, reading another stupid manual on "how to become a millionaire for Dummies" and starting again.

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