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wayneL said:
care to elaborate on that a little for us noobs?
gold? silver? soft commodities?
House prices to stagnate for 'years'
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care to elaborate on that a little for us noobs?
gold? silver? soft commodities?
wayneL
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kransky said:
Trading wise, it's up to my own performance rather than the economy, so yes any or all of the above... options... whatever I think I can lift a few bucks from. A bear market won't make much difference.
What I was referring to was that I have taken a position in a company that aquires and manages assets for itself (through connections and luck more than ability I assure you
) The nature of the assets makes the business and therefore my income fairly recession proof.I'll be working for a living for the first time in six years
(apart from a brief stint a couple of years ago)
wayneL
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Check out this blog post... straight from the elephants' mouth:
Cover of Business Week: How Toxic Is Your Mortgage?
This Business Week article is pretty good, but I feel the need to take you much deeper down the rabbit hole. Try to get comfortable, it's not going to be pleasant.
I used to work for one of the oldest and largest financial services companies in the world. But you wouldn't have known it from looking at the sign on the outside of the building. You see, the firm kept its name out of public view when it came to this business: the sub prime mortgage lending racket.
Why?
This Wall Street firm, spoken about in hushed tones around country clubs and cocktail parties, DOES NOT want to have its name associated with the financial services equivalent of a chop shop or a whore house. Oh no. It just wants the money associated with this despicable operation, and none of the press. Questions in the media about the propriety of these activities might cause discomfort for investors. Certain public appearances need to be maintained, after all.
This firm premeditated the exit from the crash unfolding before our eyes, both legally and in terms of public relations, years in advance.
Here's what it did.
The firm's strategy was to acquire fly-by-night companies who were dealing in these dodgy (sub-prime) loans and making impossible to imagine amounts of money at it. The outward public appearances of these acquired companies did not change. Some of the fly-by-night, fast-and-loose, make-it-up-as-you-go and illegal activities were transformed into probably-no-jail-time best-practices. The CFO had a habit of putting me on hold without muting the headset. He always seemed to be talking about "scratch and dent deals" with someone else in his office. "Oh sh*t. They're not going to like this. *rhetorical chuckle* What's a few million dollars between friends..."
The Them.
Behind the scenes, however, executives who weren't decapitated on the spot as part of the acquisitions, started taking orders from Them, if you know what I mean. Entirely new computer networks were built that linked the systems of these up-start, sub-prime lending corporations that---if you're fortunate---you've never heard of, to what we called "The Mother Ship" in New York, a firm that just about anyone with a net worth of a million dollars or more would probably recognize.
I was present at one of these 3am infrastructure sessions (getting paid double time), in a machine room with servers stacked floor to ceiling, cooling fans screaming, and black coffee going down by the pot full. We were taking orders from the "global ops center" in New York. The blinking lights on the "big-iron" Cisco routers indicated that roughly US$5 billion in funny money was going to move between the red-headed stepchild operation I worked for and the polished halls of The Mother Ship each month.
US$5 billion per month.
This was just one tiny, fly-fart aspect of just one division of this diabolical corporation. And I was told it was chump change for them, and that it would be cut loose at the drop of a hat, if necessary, should any undue attention start coming their way.
A manager told me something like, "It's not worth the bad PR for them. They'll rake it in for as long as things can be kept quiet. But they won't tolerate any heat in the press."
I noticed that the scam seemed very similar to the way the CIA runs cut outs. Except with this, the firm was only concerned with its public image; it's no secret who owns whom in this game, if you know where to look, and everything had been done according to federal regulations that this firm probably wrote, so it's not a question of legal or illegal. When it comes time to shut down offices and roll up the operations, they want it to go smoothly. And if Joe and Jane Six pack start to wonder who actually sold them their dodgy loan, it won't be immediately apparent. And, if Joe and Jane Six pack read the fine print, they will find that they screwed themselves by signing on the dotted line anyway. When the press interviews these people, they will talk about how "Bob's-Dodgy-Loans-While-You-Wait" screwed them over, and how they didn't know, this, that and the other thing, etc...
But to where do all the fiber paths lead?
"Bob's-Dodgy-Loans-While-You-Wait" was just being used by the firm as insulation from the inevitable bad press, that is now emerging. "Bob's-Dodgy-Loans-While-You-Wait" will be shut down and forgotten after a few days or weeks. Joe and Jane Six Pack will get their clocks cleaned, as usual. They won't even know who was really behind it all. By this time, the Mother Ship will have found other front companies to hide behind and new victims to grind into cash.
The front company I worked for actually changed names twice over the course of a year. Both of them were owned by the firm. The old domain now forwards to some backwater page on the new company's domain that displays a date that is off by a couple of years. Of course, the parent firm is nowhere to be seen!
US$5 billion per month... You'd think they could get the webserver to display the right date. Nope. Too busy generating funny money.
I went through several rounds of layoffs at this place. There would be moments of tension in the office and then these guys wearing black suits, diamond pinky rings and Bluetooth headsets would start walking around. Their ties were cinched up so tightly that the rolls of lard in the necks spilled over onto their collars. These were the goons sent by the Mother Ship to escort terminated employees out of the building.
"What the f*ck is this?" I asked my boss, "The set of Good Fellas 2?"
HAHAHA, he thought that was funny.
(None of this pissed me off, of course. I'd seen it all before. I knew what I was getting myself into when I accepted this contract. My wife and I needed land and we were going to get it. If I had to crawl through a dark, slimy sewer pipe to get it, like the guy in Shawshank Redemption, that's what had to be done. If they axed me, I'd just sell myself to some other piece of sh*t outfit until we had enough money to pay off our land. "Play to win," was my mantra though it all. Somehow, though, the axe didn't fall. Month in and month out, I kept showing up, and saving money. But enough about me.)
The firm externalized the financial risks of being in this business by selling all of the paper they generated into the secondary mortgage market at the end of every month. This is an institutional marketplace that trades in commoditized mortgages, "debt paper." In other words, at the end of each month, the firm had none of the impossible-to-payback-negative-amoritization-no-money-down loans on their books!
I handled some issues for the secondary marketing department, even, would you believe, for the person who pulled the trigger on these paper dumps at the end of the month.
"Who buys this stuff?" I asked.
"Oh lots and lots of people. Well, banks and insurance companies mostly. [Large European Bank name deleted] buys a lot of it."
I wonder if [Large European Bank name deleted] knew what I knew or cared about how those loans were generated. (Of course, they knew and didn't care. They'll sell this toilet paper debt to some other sucker down the line.)
See, I also handled issues for the used-car-salesman-type 'account executives'. Just before I left, the company switched loan origination systems. The people writing these loans were pissed because they were no longer able to get loans approved for people with fraudulent social security numbers. They would actually complain because the system was telling them that the would-be borrower was using a false/fake/invalid SSN.
"The old system never gave me these problems. How am I supposed to get any work done?! I hate this new system."
But wait, there's more.
As part of my daily duties, I had to take remote control of the systems that these donkeys were using. Occasionally, (a couple of times per day, at least) I would see the credit summary screens for the loan applicants. The highest credit score I ever saw was something like 615. The lowest was 520. Sprinkled with bankruptcies, unpaid credit cards, default this, late that.
Every once in a while, I'd chuckle and ask the person on the phone, "And this guy can buy a $400,000 house with no money down!?"
Absolutely God damned right!
That's what this company did. All day. Monday through Friday.
Things started to get interesting when They sent a memo to all employees on what to say to anyone who presented themselves as auditors or investigators. We were to refer them to some flunkie.
I thought, "Oh goodie, we're going to get raided by a three-letter agency and guys wearing guns and blue wind-breakers are going to wheel the servers out on dollies! PHBs are going to be handcuffed and frog marched into a waiting paddy wagon!"
Sadly, that didn't happen. For me, the icing on the cake moment happened when the firm started offering these criminal loans to their own employees, and at deep discounts, to pad the numbers as business started to slow down! The memo actually said that because we were such valued employees---actually, I wasn't an employee, my title was IT-Outsourced-On-Site---we wouldn't be charged any "junk fees" associated with the origination of the loan.
WOW! No junk fees! Thank you, Master! Thank you, Master!
"Just keep cool," I told myself, "Just keep cool. You're almost out of here."
I smiled, silently farted and answered the next phone call, "This is Kevin, how may I help you?"
A Note to Survivors: To those of you who are out, a tip-of-the-hat and a well-done to you. Now, what are you going to do with the cash? Please see my piece on Investing Very Close to Home.
wayneL
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url to the above post (wouldn't fit into the post)
http://cryptogon.com/2006_09_03_blogarchive.html#115726846532246735
http://cryptogon.com/2006_09_03_blogarchive.html#115726846532246735
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Once the stock market boom is over the day will come again for property. It's good for Australia to have this commodity based boom and bad news for property prices. No point investing in a going nowhere property, when you THINK you can make a huge bundle in the stock market.
In one paragraph you are living with hill billies and in the next you speak of crime ridden/drug dealing areas. You have it wrong! It is not the hill billies out there who are pushing drugs. And a boring life? Get real.krisbarry said:
A hill billie and pround of it.
trueblue
numbercruncher
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I read an article in yesterdays Melbourne paper, you now need an income of 110k pa to service the average house price/mortgage in Melbourne, ten years ago it was 43k.
The average young person has got buckleys chance.
The average young person has got buckleys chance.
wayneL
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Oh please!robots said:
What's this, a property ramp? Cycles take time. Settle down and watch it play out. The fun is only just beginning.
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numbercruncher said:
Yep that would be true and Adelaide is not too far behind that with an average house in an average suburb now needeing 81k.
Scenario: Mum and Dad now working about 50 hours a week and under severe morgagte stress, kids never see parents, kids eating microwave dinners in front of the telly, family structure breaking down etc etc ya get the picture.
All this cause some F-ck stick owns 98 homes, and now 97 familes have to endure higher prices.
Remember that almost all monies borrowed over the last 7 years from banks/finance companies has done very little about building new homes for those 97 families its just jacked up the prices of existing homes.
wayneL
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Jim Rogers has his say:
http://www.reuters.com/article/newsOne/idU...mp;pageNumber=1
Top investor sees U.S. property crash
Wed Mar 14, 2007 12:59PM EDT
By Elif Kaban
MOSCOW (Reuters) - Commodities investment guru Jim Rogers stepped into the U.S. subprime fray on Wednesday, predicting a real estate crash that would trigger defaults and spread contagion to emerging markets.
"You can't believe how bad it's going to get before it gets any better," the prominent U.S. fund manager told Reuters by telephone from New York.
"It's going to be a disaster for many people who don't have a clue about what happens when a real estate bubble pops.
"It is going to be a huge mess," said Rogers, who has put his $15 million belle epoque mansion on Manhattan's Upper West Side on the market and is planning to move to Asia.
Worries about losses in the U.S. mortgage market have sent stock prices falling in Asia and Europe, with shares in financial services companies falling the most.
Some investors fear the problems of lenders who make subprime loans to people with weak credit histories are spreading to mainstream financial firms and will worsen the U.S. housing slowdown.
"Real estate prices will go down 40-50 percent in bubble areas. There will be massive defaults. This time it'll be worse because we haven't had this kind of speculative buying in U.S. history," Rogers said.
"When markets turn from bubble to reality, a lot of people get burned."
The fund manager, who co-founded the Quantum Fund with billionaire investor George Soros in the 1970s and has focused on commodities since 1998, said the crisis would spread to emerging markets which he said now faced a prolonged bear run.
"When you have a financial crisis, it reverberates in other financial markets, especially in those with speculative excess," he said.
"Right now, there is huge speculative excess in emerging markets around the world. There will be a lot of money coming out of emerging markets.
"I've sold out of emerging markets except for China," said Rogers, long a prominent China bull.
Even in China, the world's fastest expanding economy, Rogers said stocks were overvalued and could go down 30-40 percent.
But he added: "China is one of the few countries in the world where I'm willing to sit out a 30-40 percent decline."
The last stock market bubble to burst was the dot-com craze which sparked a crash from March 2000 to October 2002.
When the last bubble burst in Japan, said Rogers, stock prices went down 85 percent despite the country's high savings rate and huge balance of payment surplus.
"This is the end of the liquidity party," said Rogers. "Some emerging markets will go down 80 percent, some will go down 50 percent. Some will most probably collapse."
http://www.reuters.com/article/newsOne/idU...mp;pageNumber=1
Top investor sees U.S. property crash
Wed Mar 14, 2007 12:59PM EDT
By Elif Kaban
MOSCOW (Reuters) - Commodities investment guru Jim Rogers stepped into the U.S. subprime fray on Wednesday, predicting a real estate crash that would trigger defaults and spread contagion to emerging markets.
"You can't believe how bad it's going to get before it gets any better," the prominent U.S. fund manager told Reuters by telephone from New York.
"It's going to be a disaster for many people who don't have a clue about what happens when a real estate bubble pops.
"It is going to be a huge mess," said Rogers, who has put his $15 million belle epoque mansion on Manhattan's Upper West Side on the market and is planning to move to Asia.
Worries about losses in the U.S. mortgage market have sent stock prices falling in Asia and Europe, with shares in financial services companies falling the most.
Some investors fear the problems of lenders who make subprime loans to people with weak credit histories are spreading to mainstream financial firms and will worsen the U.S. housing slowdown.
"Real estate prices will go down 40-50 percent in bubble areas. There will be massive defaults. This time it'll be worse because we haven't had this kind of speculative buying in U.S. history," Rogers said.
"When markets turn from bubble to reality, a lot of people get burned."
The fund manager, who co-founded the Quantum Fund with billionaire investor George Soros in the 1970s and has focused on commodities since 1998, said the crisis would spread to emerging markets which he said now faced a prolonged bear run.
"When you have a financial crisis, it reverberates in other financial markets, especially in those with speculative excess," he said.
"Right now, there is huge speculative excess in emerging markets around the world. There will be a lot of money coming out of emerging markets.
"I've sold out of emerging markets except for China," said Rogers, long a prominent China bull.
Even in China, the world's fastest expanding economy, Rogers said stocks were overvalued and could go down 30-40 percent.
But he added: "China is one of the few countries in the world where I'm willing to sit out a 30-40 percent decline."
The last stock market bubble to burst was the dot-com craze which sparked a crash from March 2000 to October 2002.
When the last bubble burst in Japan, said Rogers, stock prices went down 85 percent despite the country's high savings rate and huge balance of payment surplus.
"This is the end of the liquidity party," said Rogers. "Some emerging markets will go down 80 percent, some will go down 50 percent. Some will most probably collapse."
wayneL
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As an aside, I don't understand all the animosity towards landlords with a few houses. I might question the wisdom of some more recent investments, but that is a risk they take, fully cognizant of the downside (we hope).
Without LLs there would be no houses to rent, or utter rubbish supplied by government.
I'm living in a comfortable house in a nice area rented from a private LL, because a) I don't want to buy at current valuations b) We knew we would be moving around a bit.
I'm appreciative of the LL and he's appreciative that I supply him money and look after the house like my own. As long as everyone fulfills their side of the contract it works great.
As I've got a foot in each camp I understand each side. So let's not down LL's on some extremely ideological and poorly thought out premise, our society needs them.
I would just like to see more understanding and respect from each side and less outright greed. (It is greed that creates poor LLs and poor tenants)
It is not investors "fault" that prices have run up to unjustifiable extremes, it is more to do with inflationary oversupply of fiat money and loose credit. This will change as these factors roll back in the future.
Young people need just wait for the right time
Cheers
Without LLs there would be no houses to rent, or utter rubbish supplied by government.
I'm living in a comfortable house in a nice area rented from a private LL, because a) I don't want to buy at current valuations b) We knew we would be moving around a bit.
I'm appreciative of the LL and he's appreciative that I supply him money and look after the house like my own. As long as everyone fulfills their side of the contract it works great.
As I've got a foot in each camp I understand each side. So let's not down LL's on some extremely ideological and poorly thought out premise, our society needs them.
I would just like to see more understanding and respect from each side and less outright greed. (It is greed that creates poor LLs and poor tenants)
It is not investors "fault" that prices have run up to unjustifiable extremes, it is more to do with inflationary oversupply of fiat money and loose credit. This will change as these factors roll back in the future.
Young people need just wait for the right time
Cheers
hello,
young people need to stop spending their money not wait for RE crash
if more people saved money things would be a lot easier for them, but no, they want to give it to companies
you could get 100 fund managers, economists, yourself and not one of you can predict the future
the fact is quality blue chip RE has not been stagnate and infact has increased
isn't there that saying "time in the market not timing the market", bet there's plenty of happy shareholders who bought pre 2000
thankyou
robots
young people need to stop spending their money not wait for RE crash
if more people saved money things would be a lot easier for them, but no, they want to give it to companies
you could get 100 fund managers, economists, yourself and not one of you can predict the future
the fact is quality blue chip RE has not been stagnate and infact has increased
isn't there that saying "time in the market not timing the market", bet there's plenty of happy shareholders who bought pre 2000
thankyou
robots
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Nowhere? Ever heard of Sydney where prices are down 13% in nominal terms and far more in real terms?robots said:
Or for that matter Hobart where, by doing literally nothing, I've watched a small weatherboard house turn into a bigger brick one and get cheaper in the processs. All while my money earned actual profits in stocks and bank accounts with no rates or insurance required.
wayneL
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robots said:
Robots,
1/ credit is still unbelievably, irresponsibly loose
2/ when credit tightens, as is inevitable (it is starting) RE will start to correct seriously
3/ "time in the market not timing the market" is true for the Loooooooooooooooooooooooooooooooooooooooooooooong term and ignores a whole bunch of other pertinent factors. The real question is, "how long have you got?". Purchasers of any sort of asset immediatly prior to Oct 1929 would be quids in now, but it took decades for their asset prices to just recover. Timing is not a reality for most people, but only buying at value is.
4/ bet there's plenty of happy shareholders who bought pre 2000 Of course there is because that is when there was good value in the market. But now we have the equivalent of NAB (a blue chip) at a P/E of 40 i.e. very poor value. Elementary stuff.
5/ you could get 100 fund managers, economists, yourself and not one of you can predict the future Neither then, can you. Which makes your assertions that RE will never go down and to buy now, utterly ludicrous... in fact highly irresponsible. You cannot know that.
6/ Blue chip RE is AT PRESENT under extreme price pressure in both USA and Ireland...
7/ Are you a RE agent?
hello,
I dont know what credit has to do with young people, why do they need credit? they do not save.
no I am not an RE agent
if your buying your own home get in as early as possible, within 10-15km of capital city, prices are strong as, or other popular area
buts things havent been stagnate have they, or crashed, or corrected,
I havent made any predictions, I have constantly said get in now as things are solid as, and they are
the longer you wait the harder it will be
thankyou
robots
I dont know what credit has to do with young people, why do they need credit? they do not save.
no I am not an RE agent
if your buying your own home get in as early as possible, within 10-15km of capital city, prices are strong as, or other popular area
buts things havent been stagnate have they, or crashed, or corrected,
I havent made any predictions, I have constantly said get in now as things are solid as, and they are
the longer you wait the harder it will be
thankyou
robots
wayneL
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Uuuuuuuuuuuuummmmmmmmmmmm...... To get a mortgage? lolrobots said:
You think this won't affect us in Oz. It will. Credit will be MUCH tighter...Jim Rodgers said:
....no sub-prime/"creative finance", no 100/120% loans, no ludicrous income/loan multiples, no MEW.
It will be back to 80% minimum LVR and 3 times earnings... and incredibly difficult to get.
The party is over, time to pay the tab
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