Posts by Katharine Moody
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Speaker: Identification strategy: Now…, in reply to BenWilson,
Any real reason to think it can’t?
For a lot of reasons, I think algorithms are pretty much in charge - hence the unwind will be pretty much uncontrolled. Flash crash - all dominoes down in the blink of an eye.
But, that's a wild guess.
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Polity: House-buying patterns in Auckland, in reply to BenWilson,
Would we even notice 4 billion in debt increase in the Chinese banking sector? Especially since shadow banking there seems pretty big?
One cannot discern anything of any size amidst smoke and mirrors :-).
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Polity: House-buying patterns in Auckland, in reply to BenWilson,
Exactly. But mortgages (I suspect) are also the way most foreigners buy houses as well. So, I'd say, that's one heck of a lot of highly leveraged QE/ZIRP created money finding its way here.
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Speaker: Identification strategy: Now…, in reply to BenWilson,
Or we can convince ourselves that our ideas of value are real, theirs are false, and wait for the bubble bursting that never comes.
Such a forever increasing value (intrinsic or otherwise) only doesn't 'pop' provided the QE/ZIRP music keeps playing. Or, there is a massive, world-wide consensus on debt forgiveness for everyone - and we start the music over without any casualties over clamoring for chairs.
http://www.zerohedge.com/news/2015-07-18/peak-reach-yield
.. there are now more problem areas in the world, rather than stable situations. No major nation in the West can repay its debts. The same is true for Japan and most of the emerging markets. Europe is a failed experiment for socialism and deficit spending. China is a massive bubble, in terms of its stock markets, property markets and shadow banking system. Japan is also a basket case and the U.S. is the most indebted country in the world and has lived above its means for over 50 years. So we will see twin $200 trillion debt and $1.5 quadrillion derivatives implosions. That will lead to the most historic wealth destruction ever in global stock, with bond and property markets declining at least 75 – 95 percent. World trade will also contract dramatically and we will see massive hardship across the globe.
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OnPoint: My last name sounds Chinese, in reply to Kalka River,
And the fact that those non-whites own more than just a few smallpoxed blankets and a couple of rusty old muskets
Not necessarily. QE/ZIRP policy makes offshore finance cheap and loose. Most of these purchases are leveraged, aside from those that want to move money offshore for other reasons.
Kiwis can’t compete with the country-of-origin of the borrowed money (where that country-of-origin is running a QE/ZIRP program).
It’s got nothing to do with people – but everything to do with money creation. The playing field is not level.
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Polity: House-buying patterns in Auckland, in reply to David Hood,
Yes. I’ve been thinking that this wish to conceal by the government goes way beyond simply wanting to protect an ideological position (i.e., foreign investment is good). I actually think that if a major correction is on the cards (meaning the likelihood of our Aus banks foreclosing on a big chunk of the local private debt), then the last thing the government wants is any restrictions/disincentives toward direct foreign investment.
Presently, offshore purchasers are competing with kiwis, but what if there are no kiwis to compete (i.e., virtually no local credit and little local cash) – we are a very, very indebted nation (private debt levels that is – public debt less a worry, but we still rely in that regard on foreign masters as well). And the bond markets will punish us based on sentiment and opportunity - little guys are lovely to pick off.
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OnPoint: My last name sounds Chinese, in reply to Danielle,
Indeed, bigoted in his objection to bigotry .. in a big way.
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Speaker: Identification strategy: Now…, in reply to David Hood,
It does not, however, have much to do with a predictor of what prices will be, just if the median people can afford them.
Correct. But purely from an investment/capital risk point-of-view - trying to time/pick/enter before the peak of any market bubble is only really a strategy for those participants who are purely 'in it' for speculative gain. And that's the problem for many locals and in particular, our first home buyers - they have to take on the same large risks that the speculators are prepared to take on - yet such risks are only appropriate for those that can afford to lose.
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In relation to getting accurate data - here is a source/method suggested by a poster on another site;
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Speaker: Identification strategy: Now…, in reply to BenWilson,
That doesn’t make it a bubble. It makes it a boom
You're right, it's only a bubble if it pops. And I think I earlier explained why I think it will pop. As you point out, the question is 'how soon'. And my response (were I a highly leveraged house owner in Auckland presently) would be to first assess the safety/certainty of my ongoing income/employment in Auckland in the event of a severe recession (global conditions impacting on local). Those in essential services are likely more 'safe' (provided the government can continue to pay its wages bill) - the private sector always contracts first.
If I determined the risk of job loss during a contraction was medium to high - I'd plan now for such an event. Additional investing in the market right now is silly - the price is to high based on intrinsic value (to locals, that is) And it isn't just on an affordability measure - residential rental yields are running at no more than 2% based on today's prices. Not worth risking capital at that yield - but this is the problem the world over, no matter what the asset class.