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The Financial System is Destroying the World Economy

Discussions about the economic and financial ramifications of PEAK OIL

Re: The Financial System is Destroying the World Economy

Unread postby onlooker » Sun 08 Jul 2018, 11:53:54

can be said that these money multipliers have gone berserk since the 1980s, when financial systems were liberalised and inflation stifled (which allowed for low interest rates). The world is now staggering under a record amount of debt. Household, corporate and government debt are at unmatched levels in absolute and relative (to GDP) terms.

[quote] The world economy is suffocating under record debt [/quote]

https://www.fidelity.com.au/insights/in ... cord-debt/
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Re: The Financial System is Destroying the World Economy

Unread postby onlooker » Mon 09 Jul 2018, 01:33:57

Inflation rearing its ugly head
https://www.goldmoney.com/research/gold ... -ugly-head
This article is very reasonable. It points out the inherent instabilities in the world financial economic system. Suffice to say, Debt and incessant money printing can only last so long. At best they are masking the underlying negative trends of costly energy, more costly and difficult to access resources, wage stagnation, lack of jobs, resource constaints and inproper investments favoring speculation rather than productive investments. So, debt and QE are just symptoms of an Economic system that can no longer function as intended. Meaning to grow. But these measures themselves are steadilly deteriorating the economic landscape and setting up the probability of rapid inflation this article postulates and subsequent asset deflation. So this temporary cure is making things worse over the longer term horizon
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Re: The Financial System is Destroying the World Economy

Unread postby Outcast_Searcher » Mon 09 Jul 2018, 11:46:08

Homeowners are sitting on a record amount of cash – and not tapping it

Homeowners now have a collective $5.8 trillion in tappable equity, the highest volume every [sic] recorded

The average homeowner with a mortgage gained $14,700 in tappable equity over the past year and has $113,900 available to draw


https://www.cnbc.com/2018/07/09/homeown ... ng-it.html

Fast crash doomers love to talk about debt. Of course, they don't like to talk about the other side of the coin re debt in a growing economy. So for example -- rising housing prices MUST equal doom. But let's not mention how much equity homeowners holding such housing acquire. Equity that can be tapped. Equity that can be taken as profits if the homeowner downsizes, moves to a cheaper area, etc.

Just another example of the financial Cassandras being unwilling to take a BALANCED look at the economy, or components of the economy. Such complete irrationality naturally leads to a LOT of bad calls over the decades.

Not saying that the pure cornies are any better re balance. Only saying that, ahem, moderation would likely be a much more accurate barometer if a balance of the economic inputs were pondered relatively dispassionately. (Especially given the relative financial stability we see globally over time, even with the periodic fits, starts, and crashes we have to endure from time to time).

Not of course, that I'd expect the persistent financial Cassandras to acknowledge such logic, data, etc.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: The Financial System is Destroying the World Economy

Unread postby marmico » Mon 09 Jul 2018, 12:28:44

Homeowners now have a collective $5.8 trillion in tappable equity, the highest volume every [sic] recorded


I don't have a clue what tappable equity means. But homeowners have a record $15 trillion in real estate equity and a record $100 trillion in net worth.

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The onlookers of the world couldn't balance a check book with a bank statement if there was only one entry.
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Re: The Financial System is Destroying the World Economy

Unread postby Pops » Mon 09 Jul 2018, 12:33:40

Home value is driven by banks. In 2006 home values were 50% higher than in 2010.
What changed?
Banks

So where did banks go after 2007 you ask?

Image


Increasing financialization and rent seeking seems to me an indication that plain old capitalism is not as profitable as it used to be even though the workers have been frozen out of sharing in productivity gains for almost 50 years.

But the thing is the "financial" industry itself is now the biggest debtor!

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Re: The Financial System is Destroying the World Economy

Unread postby Outcast_Searcher » Mon 09 Jul 2018, 12:40:26

marmico wrote:
Homeowners now have a collective $5.8 trillion in tappable equity, the highest volume every [sic] recorded

I don't have a clue what tappable equity means. But homeowners have a record $15 trillion in real estate equity and a record $100 trillion in net worth.

By context, I'll assume "tappable" equity is equity they could borrow against.

Not all homeowners are in good financial shape, so some might not be able to get, say, second mortgages, even if they have net home equity (assuming banks use sanity in their lending standards, of course).

This is an educated guess -- my opinion, not fact.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: The Financial System is Destroying the World Economy

Unread postby onlooker » Mon 09 Jul 2018, 13:04:58

Every story has two sides
https://wolfstreet.com/2016/11/10/whats ... mortgages/

What the Heck’s going on with Foreclosures? Why this Spike?
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Re: The Financial System is Destroying the World Economy

Unread postby marmico » Mon 09 Jul 2018, 14:31:11

What the Heck’s going on with Foreclosures? Why this Spike?


What a freaking innumerate retard. Good ole onlooker (he being a leading proponent of the ETP ass spanking) using ancient data from Wolfie Richter's (the unemployed used car salesguy) doomtard site. Well here's the current update:

ATTOM Data Solutions, curator of the nation’s premier property database, today released its Q1 2018 U.S. Foreclosure Market Report, which shows a total of 189,870 U.S. properties with a foreclosure filing during the first quarter of 2018, up 4 percent from the previous quarter but still down 19 percent from a year ago and 32 percent below the pre-recession average of 278,912 per quarter from Q1 2006 to Q3 2007 — the sixth consecutive quarter where U.S. foreclosure activity has been below its pre-recession quarterly average.


https://www.attomdata.com/news/market-t ... et-report/
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Re: The Financial System is Destroying the World Economy

Unread postby marmico » Mon 09 Jul 2018, 15:03:58

Home value is driven by banks.


Don't think so. It's supply and demand. Otherwise, prices would be the same in Manhattan, NY and Manhattan, KS; Lafayette, LA and Lafayette, CA. The price difference between NY/CA and KS/LA is an order of magnitude.
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Re: The Financial System is Destroying the World Economy

Unread postby Outcast_Searcher » Mon 09 Jul 2018, 15:24:29

marmico wrote:
Home value is driven by banks.


Don't think so. It's supply and demand. Otherwise, prices would be the same in Manhattan, NY and Manhattan, KS; Lafayette, LA and Lafayette, CA. The price difference between NY/CA and KS/LA is an order of magnitude.

I would echo what marmico said. I was going to just ask how banks could drive home value by themselves. Even IF they controlled long term interest rates (which they don't, the market decides those, even though the FED can dictate short interest rates), those are only one component of home prices.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: The Financial System is Destroying the World Economy

Unread postby KaiserJeep » Mon 09 Jul 2018, 15:50:04

One thing most of you are overlooking. The home equity charts above are not corrected for monetary inflation. "Real" inflation is actually around 8% to 11% per year in US$. This compounds rapidly when you do the math. When corrected for inflation, most homes have roughly the same - even slightly less - equity than in 2008 when the real estate market crashed due to the financial shenanigans of those "too big to fail" financial institutions thatr Obama bailed out with YOUR MONEY.

In case you are wondering the official Cost Of Living Allowance (CLA) is "cooked" as a matter of policy by the Federal Government, who would otherwise not be able to afford the "entitlements" programs. These "entitlements" are actually being paid for by the Social Security Fund, which is a paper fiction, a bookeeping trick only. But without paying lip service to this fiction, a lot of people wouid get upset with the CLA they do get, which is far short of the real financial pinch they are feeling.

BTW, the way they mostly "cook" the CLA is by factoring out the cost of Food and Energy. After all, who needs those?

The take-away message is, if your nest egg does not INCREASE at least 10% per year average, you are not even breaking even, you are actually losing purchasing power. In this case, "INCREASE" is a combination of investment yields and new employee/employer contributions.
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Re: The Financial System is Destroying the World Economy

Unread postby Pops » Mon 09 Jul 2018, 15:59:37

of course s/d varies market to market and time to time but without lending demand is nil in any market
the Feds zero rate and easy money has caused values to exceed the great excess of the oughts

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http://charleshughsmith.blogspot.com/20 ... below.html
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Re: The Financial System is Destroying the World Economy

Unread postby Pops » Mon 09 Jul 2018, 16:22:14

You've seen this:

Image

So what happened to all those houses owners no longer occupy?

somebody(thing) bought them...
The legitimate object of government, is to do for a community of people, whatever they need to have done, but can not do, at all, or can not, so well do, for themselves -- in their separate, and individual capacities.
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Re: The Financial System is Destroying the World Economy

Unread postby Outcast_Searcher » Mon 09 Jul 2018, 17:13:14

Pops wrote:You've seen this:

Image

So what happened to all those houses owners no longer occupy?

somebody(thing) bought them...

Banks bought some of the distressed housing they owned via foreclosure -- largely as they had no choice in a very BAD market if they didn't want to take total losses. That's clearly true. (Plus there were various articles about cities FORCING banks to deal with (maintain) their foreclosed property via MAJOR fines, so there was some self-defense going on in some of those purchase decisions).

However, saying bankers are a participant in the housing market to some extent (true), is a FAR different thing than demonstrating that banks "control" the housing market.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: The Financial System is Destroying the World Economy

Unread postby Pops » Mon 09 Jul 2018, 17:53:12

Again, there is no housing market without banks.
As I was taught here, banks invent money when they loan against land/home values, how could they be more in control?
That little teepee shaped plot doesn't signify a mysterious increase and then fall off in "demand" it signifies the banking system's control of economics - when given the chance.
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Re: The Financial System is Destroying the World Economy

Unread postby GHung » Mon 09 Jul 2018, 17:59:16

Pops wrote:You've seen this:

Image

So what happened to all those houses owners no longer occupy?

somebody(thing) bought them...


Rentals. A friend of mine bought several homes out of foreclosure after the crash and now complains about the trials and tribulations of being a landlord. Go figure.
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Re: The Financial System is Destroying the World Economy

Unread postby Outcast_Searcher » Mon 09 Jul 2018, 18:25:44

Pops wrote:Again, there is no housing market without banks.
As I was taught here, banks invent money when they loan against land/home values, how could they be more in control?
That little teepee shaped plot doesn't signify a mysterious increase and then fall off in "demand" it signifies the banking system's control of economics - when given the chance.

OK, so what do you mean by control?

Is rapid housing price rise in, say SF, recently, which is so nasty it's recently been in the news with the average house in SF costing over $1.6 million, a banking conspiracy, or is it a matter of supply and demand?

I say it's supply and demand -- that things like massive numbers of good tech jobs, a highly desirable area to live (to many), a relative shortage of good space to build more housing, etc. are forcing SF housing prices up. NOT because mean bankers hate SF or treat SF worse than in some rural backwater in my home state of KY, where home prices are pretty flat since with few jobs, not many want to live there.

https://www.cnbc.com/2018/07/06/san-fra ... -2018.html

Yes, the banks make the vast majority of mortgage loans (in a highly competitve market), and own almost all that market now that the S&L's are gone. And yes, the vast majority of people who buy a house use a mortgage loan from a bank. I still don't think that means they control the housing market. Now, they DO control mortgage rates to the extent they can get away with it, but of course, as long as it's a highly competitve market, there's only so much control they have over them.

When mortgage rates start having a spread vs. bank account interest rates of even half of the spread for credit cards -- THEN I'd want to take another look at whether banks are managing to do meaningful damage to the housing market via their "control".
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: The Financial System is Destroying the World Economy

Unread postby Pops » Mon 09 Jul 2018, 18:29:25

DING DING DING

Exactly Ghung. Not just individuals but big time investors. And any con man developer worth their salt knows, the only way to go is with OPM (other people's money)

Or in the case of mortgages, money from nothin.

And who makes the deciscion what money gets invented? Call it the financial industry or, "banks" for short.
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Re: The Financial System is Destroying the World Economy

Unread postby Newfie » Mon 09 Jul 2018, 19:34:27

Basically I don’t know squat, but I’ve a little experience.

Our 4 apartment house in cc Philly, we get a lot of inquires into purchasing it from us.

A few years ago my daughter was looking to buy an investment property. I helped her look. She was looking for a relatively low priced place in a city neighborhood. The ads for all these places were aimed at investors NOT home owners.

Those two things tell me Money men want into real estate. Why? Because real estate has intrinsic value vs the market which can crash to zero.
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Re: The Financial System is Destroying the World Economy

Unread postby KaiserJeep » Mon 09 Jul 2018, 20:04:03

Yes. Which is why I want to build 2-3 rental cottages on Nantucket, which has become a "vacation destination", although it is also the wife's birthplace. We would like to provide affordable year-round rentals to the Middle Class working people who are being priced out of the market on the island today. Our kind of people, some of whom have been there for generations, but who cannot afford to live there anymore because of real estate pricing. It is a difficult thing to do without losing your bundle, because the tax treatments are very different for residents vs. "Summer people". We would like to be considered year-round residents there, but at the same time, own another home closer to the Grandkids.

Either way, they are not making real estate anymore.
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