Monday, October 26, 2009

Blowing bubbles again

The latest bubble warning: Swedish house prices

Swedish negative interest rates and quantitative easing seems even more aggressive than BoE. But the results are the same... "There is mounting evidence that bubbles are forming again everywhere across the globe as easy money makes itself felt in asset prices. The latest evidence comes from Sweden where Europe’s lowest home loan rates have pushed up the price of residential property.

Posted by mountain goat @ 12:08 PM (1413 views)
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8 thoughts on “Blowing bubbles again

  • ‘There is mounting evidence that bubbles are forming again everywhere across the globe as easy money makes itself felt in asset prices.’

    Evidence of the coming Global Hyperinflationary Depression? The seeds of the next crisis have been sown by the insane elite.

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  • mountain goat says:

    I think results like this are going to force the taps to be closed again sooner than expected. If not, then the final collapse will be all the deeper. But perhaps crediting Central Bankers with more sense than they had 8 years ago is naive?

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  • “the abolished property tax has also contributed to the housing rally”

    They never learn…..

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  • 2. mountain goat said…
    I think results like this are going to force the taps to be closed again sooner than expected. If not, then the final collapse will be all the deeper

    There, I think, you have it. The second collapse, preceeded by a ‘crack-up boom’ will be worse than the first and lead to the introduction of a new global model.

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  • mountain goat says:

    Chrisa – am trying to find out what ‘crack-up boom’ means. Has a nice ring to it but not sure what it means. Phrase seems to be associated with Ludwig Von Mises a lot on the internet.

    I tend to reject arguments about inflation because I believe our problems are already caused by inflation. We have over capacity, high asset prices and record debt (inflated credit money supply). This situation arises after inflation has happened. I can’t see how this can lead to even more inflation. A lot of people talk about inflation when I think they mean currency devaluation so that things become less affordable.

    IMO there will be an event that turns the tide against easy money. This past year the easy money cartel have been given free reign to try fix the problem but this event will finally make it clear that the game is up. After this ‘event’ there will be a need to pay off debt, which will be deflationary. This ‘event’ could be something like Lehman, but who knows it could be anything. It is not so much the event that triggers this, but rather that the world is ready. Clearly the Central Banking money manipulators and spend-thrift governments are out of ideas. The cycle of easy money, inflation of asset prices, essentials of life less affordable, increase in debt, easy money… is their model, but the cycle is spinning faster and faster (money creation going straight into asset prices, by-passing the economy) indicating that it is approaching the point of cracking up. Perhaps this is what is meant by a crack-up boom?

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  • 5. mountain goat said…
    Chrisa – am trying to find out what ‘crack-up boom’ means. Has a nice ring to it but not sure what it means. Phrase seems to be associated with Ludwig Von Mises a lot on the internet.

    I think the ‘crack up boom’ will occur when vast numbers of people appreciate that their fiat currency is rapidly being destroyed through excessive printing. They will then rush out and spend whatever they have while it still has a value. Temporary boom like conditions before the final collapse.

    ‘A lot of people talk about inflation when I think they mean currency devaluation so that things become less affordable.’

    Inflation and currency devaluation are one and the same I believe brought about by excessive (deliberately) creation of fiat currency and credit. How else can we explain the average house being 5K in 1970 and 165K in 2009? The money is worth less is the explanation because they produce too much of it for reasons of inflating away debt and encouraging speculation and stealing wealth. I may be wrong but then I’m not an economist, my training was in science. Mind you GB is a historian, apparently.

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  • 5. mountain goat said…I tend to reject arguments about inflation

    MG – IMO prices of assets that measure inflation (i.e. in the basket of goods) have in the past gone down as a result of Chinese imports. Their current value is less than what it should be and will rise when the china effect ends (i.e. when they stop artificially fixing the FX rate). Inflation will therefore rise, as will food prices. When “essentials” rise in price it is accutely felt by the public.

    the prices of debt funded assets capable of being used as tools for speculation i.e. houses has gone up with the credit bubble. Whether prices go up down or sideways is I think largely affected by how much money can be printed, Zimbabwe style. Either way it will lead to currency devaluation which will mean imported goods (‘most everything!) cost more and inflation (as measured by these goods) will rise even more.

    So I think we will see either high inflation/stagflation with falling house prices, or MASSIVE inflation and steady or rising house prices.

    Hence why I invested a while ago in gold and inflation linked bonds.

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  • mark wadsworth says:

    Drewster beat me to it. When you scrap a property tax, the next bubble is all the bigger.

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