Like the illusion of Wall Street, with its vast and powerful investment banks, now shuttered, China too is an illusion perpetuated by the Globalists that gave us the 15,000 mile Caesar salad, poisoned cat food and lead based paint on babies' pacifiers. Like the illusion that money would come from thin air to always push housing prices higher, China has spent a generation pursuing its illusion. Pursuing an unattainable dream to be like the West, while 6000 years of its carefully shepherded top soil blows into the sea.
Posted: Thu Aug 07, 2008 11:39 am Post subject: Re: Housing and Economic Collapse - In Progress #3
DantesPeak wrote:
However no rate of interest will stop a depression from happening.
In fact, lowering short terms interest rates may actually cause long term interest rates to rise, thereby causing more problems for the housing market.
This is very much true, and is already happening now. The "Greater Depression" will not be stopped by interest rate cuts. That just leads to Japan's pushing on a string.
The Greater Depression will be prevented through special programs and "creative" liquidity injections.
The biggest tool for this that comes to my mind is Fannie and Freddie. Government subsidized long term fixed rate mortgages for all hard working American Comrades who wear their red stripes proudly
Reports that the government is considering changes to stamp duty are causing confusion and delays in the housing market, the BBC has learned.
Quoted reader: "I don't want to sign one day only to find that stamp duty has been abolished the next".
Two days ago on page 7 of this thread I posted the following:
Twilight wrote:
UK house buyers may be given tax rebate. Last year stamp duty raised £6.5bn, this year its contribution has collapsed, now it may simply be deferred (in politics this amounts to abandonment). The measure is futile as prospective buyers are beginning to see that this discount is worth only a month or two of natural price declines.
Evidently I overestimated market participants' ability to perform simple research and arithmetic:
BBC wrote:
Currently, people buying properties for between £125,000 and £250,000 pay 1% in stamp duty at the time of sale. Those spending more than £250,000 pay 3%, while homes worth more than £500,000 incur a 4% rate.
So people are delaying purchases in the hope the government grants them a 1% saving in three months' time, while they would make several times that saving just by sitting on their hands anyway. And our Chancellor is actually being blamed for creating uncertainty among "greater fools" who everyone can now see are ignorant of reality. Whether the critics see it that way or not, the root of their discontent is that the man has disrupted the declining flow of replacement bagholders.
Some blame is in order - his staff cancelled an interview when they were refused a guarantee that a question would not be asked. Whatever is said about the state of democracy in the UK, this will be one of the final nails in the coffin of his career as the news media do not forgive displays of fear, weakness and cowardice. The core blame may be undeserved, but faced with it, the highest elected economic official in the country hid under the covers. Bad move. _________________ Volatility. When life isn't exciting enough.
Posted: Thu Aug 07, 2008 12:21 pm Post subject: Re: Housing and Economic Collapse - In Progress #3
Snowrunner wrote:
Homesteader wrote:
What are your theories on why the USD is strengthening in the face of poor economic news?
Wishful thinking/ hope.
That's essentially what has driven the markets for a long time. There is really nothing else behind it. There are people out there right now who think that everything will be fine. Once the next set of numbers comes out that shows it isn't, it will correct again.
How is the dollar strengthening wishful thinking? It appears that even with the ECB and BOE holds today the FX traders especially prefer $$ over euros and yen . Apparently virtual dollar destruction vis a vis debt defaults/deleveraging is creating a mini run for dollars. The $4 trillion forex market and its traders are telling us in part, since the BSC fiasco in March, that it's time for the other of the world's currencies to bleed a little, especially the euro. BTW, more evidence of deflation. _________________ Civilization: the biosphere's skin disease
Posted: Thu Aug 07, 2008 12:25 pm Post subject: Re: Housing and Economic Collapse - In Progress #3
firestarter wrote:
How is the dollar strengthening wishful thinking? It appears that even with the ECB and BOE holds today the FX traders especially prefer $$ over euros and yen . Apparently virtual dollar destruction vis a vis debt defaults/deleveraging is creating a mini run for dollars. The $4 trillion forex market and its traders are telling us in part, since the BSC fiasco in March, that it's time for the other of the world's currencies to bleed a little, especially the euro. BTW, more evidence of deflation.
the thought simply is that the US has "fixed" the problem or lessened it. Instead of batting down the hatches and giving up on the USS Debt they try to raise her from the sea.
I am pretty certain this will correct the moment it becomes clear that there is no bottom in the ship anymore.
Posted: Thu Aug 07, 2008 12:42 pm Post subject: Re: Housing and Economic Collapse - In Progress #3
Snowrunner,
The dollar has fallen precipitously over the past six bubble years. Now as the bubble is bursting and dollars are literally being destroyed they become relatively more valuable. It's entirely possible that a bottom has been established and in the near term it's time for the rest of the world's currencies to bleed, especially the god awful euro.
The gov'ts monetizing activities don't put much of a dent in the debt destruction going on, and therefore, so far, is of little effect on the dollar's prowess. The bond market is just another of the metrics confirming this. Hard as it might be to swallow, in this environment cash really can be king. _________________ Civilization: the biosphere's skin disease
Oh oh. A fatal mistake. At some point Paxo will have his guts for garters for that.
tugboat wrote:
The dollar is getting stronger because the men bahind the curtain want it to!
The men behind the curtain can't even see what's going on because they're behind the curtain and not out on the street...
... I'm more of an adherent to the Cockup (occasionally the 'cocked up conspiracy') Theory of history. History consisting mainly of a procession of plans that go wrong. The Law of Unintended consequences is universally applicable and almost univerally ignored by the Powers That Be, who tend to have a grandiose overestimation of their own abilities - people with certain types of personality disorder (DSM-IV Axis 2 cluster B) tend to gravitate to high office.
Joined: Mar 12, 2007 Posts: 1009 Location: As close as I can get to the beginning of the pipe.
Posted: Thu Aug 07, 2008 2:21 pm Post subject: Re: Housing and Economic Collapse - In Progress #3
Twilight wrote:
The Law of Unintended consequences is universally applicable and almost univerally ignored by the Powers That Be, who tend to have a grandiose overestimation of their own abilities - people with certain types of personality disorder (DSM-IV Axis 2 cluster B) tend to gravitate to high office.
Ooh, that's a nice slam. Antisocial, Borderline, and Narcissistic. That may represent 25% of the American population at this point, though.
Here's an illustration of all of the points made on this page about the bottom dropping out of the dollar through "creative liquidity," compliments of Pru-Bear denizens. Party on, dudes!
Quote:
"Recently, attention has turned to an alternative approach
to monetary policy implementation that has the potential to
eliminate the basic tension between money and monetary
policy by effectively “divorcing” the quantity of reserves from
the interest rate target. The basic idea behind this approach
is to remove the opportunity cost to commercial banks of
holding reserve balances by paying interest on these balances
at the prevailing target rate. Under this system, the interest rate
paid on reserves forms a floor below which the market rate
cannot fall. The supply of reserves could therefore be increased
substantially without moving the short-term interest rate away
from its target. Such an increase could be used to provide
liquidity during times of stress or to reduce the need for
daylight credit on a regular basis. A particular version of the
floor-system approach has recently been adopted by the
Reserve Bank of New Zealand.
It should be noted that adopting a “floor-system” approach
requires the central bank to pay interest on reserves, something the Federal Reserve has historically lacked authorization to do.
However, the Financial Services Regulatory Relief Act of 2006
will give the Federal Reserve, for the first time, explicit authority
to pay interest on reserve balances, beginning on October 1,
2011. A floor system will therefore soon be a feasible option
for monetary policy implementation in the United States.
In this article, we present a simple, graphical model of the
monetary policy implementation process to show how the
floor system divorces money from monetary policy. Our aim
is to present the fundamental ideas in a way that is accessible
to a broad audience. Section 2 describes the process by which
monetary policy is currently implemented in the United States
and in other countries. Section 3 discusses the tensions that can
arise in this framework between monetary policy and
payments/liquidity policy. Section 4 illustrates how the floor
system works; it also discusses potential issues associated with
adopting this type of system in a large economy such as the
United States. Section 5 concludes."
"This photograph shows a woman living in a tent during the Great Depression. The woman is the daughter of a migrant Tennessee Coal Miner. The picture was taken in the American River Migrant Camp near Sacramento California.
It was on this day, July 8, in the year 1932 that the Dow Jones Industrial Average bottomed out at a low of 41. It was not until the 1950's that the stock market fully recovered from the crash of '29. It is amazing what level of suffering occurred in the 30's as a result of the excesses of the '20's. Lets hope that our present financial challenges only lead to a "recession".
Добавьте описание _________________ Viddy well, little brother. Viddy well.
Great article. Absolutely essential reading for anyone wishing to familiarise themselves with the UK speculative housing bubble.
On point 4, note Cheltenham & Gloucester is an arm of Alliance & Leicester, which provides it with funding for its lending. A&L is now selling itself to Abbey owner Santander to escape the coming implosion of its domestic and foreign asset/mortgage backed debt holdings. Along with the now-recognisable US acronyms, there is heavy BTL exposure.
Bradford & Bingley has no such luck as there is nothing else for a buyer to buy. Once it posts half-year results at the end of the month (or once they are leaked a week an advance to prep the market, as with tomorrow's RBS loss), I expect talk to turn to a controlled end game. That should be interesting.
HBOS as "Britain's biggest housebuilder" - that is a new one to me, I was wondering who would end up owning the dark complexes. It is also another BTL central.
Paragon barely counts, they blew last year. Not as sensitive an issue as it was not a bank with depositors.
Council of Mortgage Lenders Statistics (scroll down) to see some numbers and rankings yourself. They do not give you much data if you are not a member, but it is only a matter of months before some juicy numbers start showing up in the broadsheets. You will need to do a few searches to find out which bland name (eg Platform) is tied up with which household name through ownership or sales. It is an interesting exercise to replace those names with who is really involved, and tick off those which have blown early. That does not give a full picture of course, there are building societies which in the great scheme of things had a tiny part of the market but ended up with proportionally greater exposure, and there will be some damage there.
Very early days yet, but as the article suggests, once the cracks appear, it could be an avalanche.
Oh, and Iaato, wrong quote tag. That was skeptik, not me. _________________ Volatility. When life isn't exciting enough.
This mostly relates to a large amount of new Treasury bonds and bills sold this last week.
No doubt other countries figure that the US is too big to fail, at least right now.
This kind of buying is unlikely to repeated anytime soon, but in the short term, it makes it appear that the US dollar is 'strong'. _________________ It's already over, now it's just a matter of adjusting.
Joined: Mar 12, 2007 Posts: 1009 Location: As close as I can get to the beginning of the pipe.
Posted: Thu Aug 07, 2008 5:31 pm Post subject: Re: Housing and Economic Collapse - In Progress #3
Twilight wrote:
Oh, and Iaato, wrong quote tag. That was skeptik, not me.
Oops. You just can't get good help around here. I think I saw the word cock-up and assumed it was from our beleaguered Brit. So are you an expat, Skeptik?
Alex, Ilargi has been posting some great depression photos over at Debt Rattle blogs. Have you seen them? Lots of haunted eyes there.
http://theautomaticearth.blogspot.com/ _________________ "When fascism comes to America it will be wrapped in a flag and carrying a cross." --Sinclair Lewis
Joined: Mar 12, 2007 Posts: 1009 Location: As close as I can get to the beginning of the pipe.
Posted: Thu Aug 07, 2008 6:28 pm Post subject: Re: Housing and Economic Collapse - In Progress #3
DantesPeak wrote:
No disputing that, but more immeadiately foreign central banks/funds bascially bought up a huge $35 billion in Treasury bonds this last week.
This mostly relates to a large amount of new Treasury bonds and bills sold this last week.
No doubt other countries figure that the US is too big to fail, at least right now.
This kind of buying is unlikely to repeated anytime soon, but in the short term, it makes it appear that the US dollar is 'strong'.
Quote:
"If our nation can issue a dollar bond, it can issue a dollar bill. The element that makes the bond good, makes the bill good, also. The difference between the bond and the bill is the bond lets money brokers collect twice the amount of the bond and an additional 20%, whereas the currency pays nobody but those who contribute directly in some useful way. It is absurd to say that our country can issue $30 million in bonds and not $30 million in currency. Both are promises to pay, but one promise fattens the usurers and the other helps the people. " - Thomas Edison, The New York Times, December 6, 1921
"If the American people ever allow private banks
to control the issue of their money,
first by inflation and then by deflation,
the banks and corporations that will
grow up around them (around the banks),
will deprive the people of their property
until their children will wake up homeless
on the continent their fathers conquered." - Thomas Jefferson
"Let me issue and control a nation's money and I care not who writes the laws." - Mayer Amschel Rothschild, 1790
"When a government is dependent upon bankers for money, they and not the leaders of the government control the situation, since the hand that gives is above the hand that takes... Money has no motherland; financiers are without patriotism and without decency; their sole object is gain." -- Napoleon Bonaparte, 1815
"The actual process of money creation takes place in commercial banks. As noted earlier, demand liabilities of commercial banks are money.."Confidence in these forms of money also seems to be tied in some way to the fact that assets exist on the books of the government and the banks equal to the amount of money outstanding, even though most of the assets themselves are no more than pieces of paper--.", P.3."Commercial banks create checkbook money whenever they grant a loan, simply by adding new deposit dollars in accounts on their books in exchange for a borrower's IOU.", p. 19. "The 12 regional reserve banks aren't government institutions, but corporations nominally 'owned' by member commercial banks.",
p. 27.- Federal Reserve Bank of Chicago
"The study of money, above all other fields in economics, is one in which complexity is used to disguise truth or to evade truth, not to reveal it (p15). The process by which banks create money is so simple that the mind is repelled." - John Kenneth Galbraith, Money: Whence it came, where it went - 1975, p29
Voltaire (1694-1778) “Paper money eventually returns to its intrinsic value ---- zero.”
Daniel Webster,
speech in the Senate, 1833 “We are in danger of being overwhelmed with irredeemable paper, mere paper, representing not gold nor silver; no sir, representing nothing but broken promises, bad faith, bankrupt corporations, cheated creditors and a ruined people.”
Federal Reserve Bank, New York
The Story of Banks, p.5. "Because of 'fractional' reserve system, banks, as a whole, can expand our money supply several times, by making loans and investments."++
Federal reserve Bank of New York, I Bet You Thought, p.19 "Commercial banks create checkbook money whenever they grant a loan, simply by adding new deposit dollars in accounts on their books in exchange for a borrower's IOU."++
Frederic Bastiat, The Law, "When plunder becomes a way of life for a group of men living together in society, they create for themselves in the course of time a legal system that authorizes it and a moral code that glorifies it."++
Irving Fisher, 100% Money "Thus, our national circulating medium is now at the mercy of loan transactions of banks, which lend, not money, but promises to supply money they do not possess."++
John Maynard Keynes, The Economic Consequences of the Peace, 1920, page 235ff "Lenin is said to have declared that the best way to destroy the Capitalistic System was to debauch the currency. . . Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million can diagnose."
Ralph M. Hawtrey, former Secretary of Treasury, England "Banks lend by creating credit. They create the means of payment out of nothing."++
http://www.fame.org/NotableQuotes.asp _________________ "When fascism comes to America it will be wrapped in a flag and carrying a cross." --Sinclair Lewis
Posted: Thu Aug 07, 2008 8:07 pm Post subject: Re: Housing and Economic Collapse - In Progress #3
Yeah, well the euro is really crappin the bed tonight, while the dollar is bustin 75. Sure, the dollar is crap but by the end of this global financial mess, from this point on the euro might just be worse than mr dollar. _________________ Civilization: the biosphere's skin disease
Posted: Thu Aug 07, 2008 10:42 pm Post subject: Re: Housing and Economic Collapse - In Progress #3
firestarter wrote:
Yeah, well the euro is really crappin the bed tonight, while the dollar is bustin 75. Sure, the dollar is crap but by the end of this global financial mess, from this point on the euro might just be worse than mr dollar.
Why?
From what I can see the Europe may end up being the safest bet right now. At least Europe hasn't cored out all it's industries and if push would come to shove they could still cut off some fat before they hit the bone.
I also think that the ECB has the least insane monetary policy so far, if it stays that way remains to be seen, but I'd put my money on the Euro, not the Dollar as far as "being worth something" goes.
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