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  1. #31
    Dilettante
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    German Government's latest 10 year bond offer of EURO 3 Billion has a -0.24% interest rate. A pretty good indication on where rates are heading in the medium term. No need to fix long in my view.

  2. #32
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    Quote Originally Posted by iceman View Post
    German Government's latest 10 year bond offer of EURO 3 Billion has a -0.24% interest rate. A pretty good indication on where rates are heading in the medium term. No need to fix long in my view.
    Yes I agree it's nasty and for years the EU has told the people "Austerity Measures are a Must". I'm curious who exactly is putting money in German bonds, let alone putting money in the EU? Over in America they knew the cards would fall down when the EU bloc was formed after 2000. Their recipe to have a 'united of nations ; like the United States so they could compete competitively, but that didn't happen well.

    We've been told the root cause is none of the various EU nations had 'consolidated it's debt'. You have Italy that is claiming Germany for war repatriations of their gold and $ taken away in early 19th century (hidden in a similar fashion as how Maduro in Venezuela moved the nations gold to Russia). Look at all the different languages and cultures within the EU ; how would any synergy exist economically?

    Any explanation in the past 3 years why the US currency and their equity markets had done so well? It's because the smart wealthy folk in the EU (and many other places around the world) have moved their wealth to the US (China's been doing it for a very long time ; they send their cash to the US and buy the DOW, or real estate).

    If there's any leading interest rate we should follow, then that would have to be the US reserve bank rate. These negative rates we see in the EU have minimal influence outside the EU. Just look at the buyers in the bond market. I recall during the Greek crisis, the US issued T-Bills and China had no problems buying it up. When the Greek gov't went to offer bonds, China wasn't there... When Italy wants to issue gov't bonds but is only able to pay 2%, no one buys any ; because the market thinks at that default risk level, Italy should be paying 8%. So Italy has no choice but to rely on the ECB which says well.. we'll buy the bonds somewhere in between. On the short hand, the ECB screws the rest of the EU nations and that's what we see happening in Germany (rob Peter to pay Paul).

  3. #33
    FEAR n GREED JBmurc's Avatar
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    Quote Originally Posted by Bjauck View Post
    The trouble with buying a house is that you cannot spread the risk unlike with shares where you can a portfolio of different shares.

    There have been years of increasing prices due to falling interest rates so how many years of falling interest rate fuelled price rises can be left? The CGT resolution may mean that NZ investors still keep on putting their money into residential property rather than equities and business but we may already be near the top of the cycle anyway. Also given NZ's already hollowed out share market and expensive land will there be any more drift of capital from business and share equity to real estate?

    NZ may be very susceptible to a severe correction as we have used the drop in interest rates to load up to the max on debt to out-bid others to leverage ourselves into residential land.

    However The lack of action over a CGT I think will mean that NZ residential property will continue to be the tax-preferred de-facto superannuation scheme for those who are rich enough to afford deposits and can afford investment in land.


    I agree in part ... if we are talking about pure 1x investment NZ Res rental property Vs several NZ Blue chip higher yield shares then yes I agree the latter has some bonus facts ..like being able to sell online within seconds not days to years with NZ prop..

    But on the other hand in "sanctus671" case and many like him paying rent ..owning a house is a no-brainer esp if you make a smart purchase and don't pay overs for a leasehold unit etc ..

    But if sanctus can afford a freehold solid home and rent the rooms out he will be much better off longer term even if NZ property pulls back 20% if he made a smart purchase he should be able to add value and rent rooms out lifting his cashflows better than if he was just renting..

    Then going forward sanctus will have an asset that is nearly as good as Cash ... unlike say commercial property that banks give 50% value or shares that if your lucky 5-10%...

    And as he pays down the debt he will gain equity can borrow upto 80% to buy other investments at the lowest rates available

    Personal Property a Great Core investment to then branch outwards from
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  4. #34
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    I know a bit off original topic but here's a couple of charts to illustrate the problem with German banks - Deutsche Bank: (with reference on the equity / stock side ; not the bond issue side).

    https://static.seekingalpha.com/uplo...5614645526.png

    https://upcrypto.org/wp-content/uplo...on-660x330.jpg

    Canada has no exposure and i'm certain NZ & Australian banks too have no exposure. This is the thing that even we live in a globalised world, capital flows of $ move freely and tend to pick safer places. I don't see a total collapse of the EU but I do see the average citizen living there will have a tougher time, especially for future generations.

  5. #35
    FEAR n GREED JBmurc's Avatar
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    Default If you have a Central bank then your major banks are all interlinked

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  6. #36
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    The exposure in NZ/Aus is a lot less than what's happening in Europe. So to be correct, no DIRECT exposure but some indirect exposure. I would not say an EU collapse would also take down the NZ & Aus economy.

  7. #37
    FEAR n GREED JBmurc's Avatar
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    Quote Originally Posted by SBQ View Post
    The exposure in NZ/Aus is a lot less than what's happening in Europe. So to be correct, no DIRECT exposure but some indirect exposure. I would not say an EU collapse would also take down the NZ & Aus economy.
    No of course not directly.. but I'm sure an EU banking collapse would certainly hurt all major international banks and cause major systematic issues across Global banking enough to really hurt the NZ's foreign backed credit-fueled economy
    Last edited by JBmurc; 25-06-2019 at 11:35 PM.
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