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  1. #436
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    Hard to blame european banks for reckless lending when they have Mario "Whatever it takes" Draghi in charge.

    https://www.cnbc.com/2019/03/27/bank...heres-why.html

    "Banks will typically make money when interest rate curves are steep by lending out at higher rates and paying deposits with lower rates. But the ECB deposit rate is currently set at negative 40 basis points, forcing cash rich banks to pay for placing deposits and current account reserves with the central bank.
    The ECB has set a negative rate to encourage banks to lend out to the real economy, drive growth and stimulate inflation."

    Assets prices are high Draghi wants them higher (trickle-down economics?)how is the average new home buyer in NZ taking on a $400,000 mortgage to buy a house good for the economy?

    I assume they all studied at the John Law school of economics. What lessons were learnt back then? None I guess.
    Last edited by Aaron; 28-03-2019 at 08:04 AM.

  2. #437
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    the amount of negative-yielding debt has nearly doubled in just six months, and confirms that the global asset bubble is back

    https://www.zerohedge.com/news/2019-...negative-yield
    Last edited by JBmurc; 30-03-2019 at 10:58 AM.
    People don't have ideas, ideas have people

  3. #438
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    Inflation is winning hands down in America according to this guy.

    https://www.zerohedge.com/news/2019-...g-asset-prices
    It seems obvious and I guess it will never change unless people think it is unfair as I do. If Trump, was a protest vote by working class middle America I think they might have picked the wrong guy, although they seem more concerned with immigration rather than a system that is increasing wealth inequality.

  4. #439
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    Central Bank success story price rises thanks to minimum wage increases. Although wage inflation bad, asset price inflation good seems to be the general consensus of the central banks and political commentators.

    They also tend to have a poor view of MMT and a good view of QE although no one has been able to explain to me what the fundamental difference between these two acronyms is as at it's core it is a belief that money printing is limitless and we should do more to make the world a better place. F**king morons on the left and the right as far as I can tell.

    https://www.msn.com/en-nz/money/news...cid=spartanntp
    Petrol on the way up but that is due to political turmoil.


    My 2.8% on term deposit is not looking very good.

  5. #440
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    If this guy and Janet Yellen are correct waiting for the next downturn is a bad strategy.
    https://www.cnbc.com/2019/04/30/fed-...tiya-says.html

    My strategy keeps getting worse and worse. Yet each year is one more year closer to my imaginary investing opportunity of a life time. My eventual capitulation will be the bell at the top.

  6. #441
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    Quote Originally Posted by Aaron View Post
    If this guy and Janet Yellen are correct waiting for the next downturn is a bad strategy.
    https://www.cnbc.com/2019/04/30/fed-...tiya-says.html

    My strategy keeps getting worse and worse. Yet each year is one more year closer to my imaginary investing opportunity of a life time. My eventual capitulation will be the bell at the top.
    It’ll never come Aaron

    The govt/Fed manipulation is taking us away from capitalism to socialism — socialism for the 1%

    Some might even call it fascism - like in the US Govt is supreme, all-encompasing, & runs the economy (market manipulation) / Country must grow w/implied goal to rule the world (US empire) / Questioning the govt is not tolerated
    “In a roaring bull market, knowledge is superfluous and experience is a handicap.”

    –Benjamin Graham”

  7. #442
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    Gotta stop reading the news when I should be working. I would be much better off financially but I can't let this pass without my unscientific theory regarding rising rental prices.

    https://www.msn.com/en-nz/money/home...cid=spartanntp
    This turkey blames the govt. Replacing letting fees with rent increases and requiring insulation of houses. Heat pumps seem excessive to me and he is right it will be playing a part.

    I suspect "Investors" are buying the rentals for such high prices and low yields the only way to justify this decision is to constantly push up rents. Admittedly if they were pushing too fast renters would find an alternative (like staying with Mum & Dad). I think you might also find maintenance on property will get skimped on as the cashflow will hardly cover a paint job every few years. Also immigration is near highs so unless the immigrants are sleeping on the street they will be pushing up demand. No fact finding done, just a stab in the dark. The inflation cycle continues and ramps up when wages need to keep up with asset values and rents. Job well done by the NZ reserve bank.

    Here is another guess the Reserve Bank of NZ has a mandate through targeted inflation to push up prices every f**king year so rising prices should not come as a surprise to anyone. It is just that the biggest rises have been in the property(house price) market and rents are tied to this.
    Last edited by Aaron; 14-05-2019 at 10:12 AM.

  8. #443
    FEAR n GREED JBmurc's Avatar
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    Default GFC stage 2

    Its really all just one big disgusting mess and much the same around the world had the Govts + Central banks just let the free markets run their course during 2008-12 GFC then we wouldn't have seen the massive pump into property values from all the cheap and free money from QEs all the malinvestment that now needs to be held up to stop and even bigger disaster in financial markets

    Yes many companies would have gone bankrupt many would have lost their investments and jobs but least it would have been a real free market ...you make poor investments then you lose and if your a CEO business mgmt that breaks the law you go to jail and pay the fine.
    who went to jail for the illegal CDS or market manipulation ?? lies feed to shareholders ?

    What we have now is crony capitalism where the Banks and Big Corporations rule the world + White collar crime goes unregulated Sharemarket run more along the lines of Casino's

    Drugs are made more available to dumb down the masses even more- (along with MSM spewing utter rubbish every night ...look cheap money yaa)

    while the peoples money has less and less value key assets like shelter is pushed to insanely expensive levels along with healthy food/ insurance etc !!! it just nuts.

    Just imagine here in NZ in a micro sense (forget about overseas factors during this time) had we not allowed lending interest rates to drop below 6-7% and ban on all non-NZ residential from buying existing homes .. then we wouldn't had seen the pure speculation into property prices .. with many investors keeping money in the bank earning a decent dollar return..

    Now all the brain dead property investors buying at present need $900pw rent for their family home just to break even at 4% rates !! all believing the utter rubbish pumped by RE agents and MSM that property is a one way bet to higher Cap gains

    Instead the future is pointing to Negative rates as no-one in power want to reap what they sowed in bubble economics ,,, so just kick the can down the road and make the DEbt cheaper to hold
    .
    Last edited by JBmurc; 14-05-2019 at 12:29 PM.
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  9. #444
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    We just cannot have debt deflation.
    I guess it is a ponzi scheme in a way.

    https://www.ft.com/content/f09cda30-...d-7c18c0ea0201

    he writes an article about how the long debt cycle might end but includes this line.

    "Meanwhile, if governments acted too slowly (or not at all) a depression might ensue, as in the 1930s, via mass bankruptcy and debt deflation. Many fools recommended that in 2008."

    How else do you end a debt cycle except by reducing debt. The difference between mass bankruptcy and debt deflation and reducing debt by inflating it away just means different people get hurt. The first way is quick and painful for borrowers. The second way is slow and painful for savers.

    Either way reading between the lines it seems to be if they can't inflate the debt away they will blow up the system with too much debt. Now more than ever I can't wait for my deposits to mature, I think I will buy residential property as these policies are forcing me to do. Sadly I will need some debt as everything is so expensive. It is overpriced but looking better than money in the bank long term. I just wish we could have had a correction before I do this but I guess that is not possible.

  10. #445
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    Quote Originally Posted by Aaron View Post
    We just cannot have debt deflation.
    I guess it is a ponzi scheme in a way.

    https://www.ft.com/content/f09cda30-...d-7c18c0ea0201

    he writes an article about how the long debt cycle might end but includes this line.

    "Meanwhile, if governments acted too slowly (or not at all) a depression might ensue, as in the 1930s, via mass bankruptcy and debt deflation. Many fools recommended that in 2008."

    How else do you end a debt cycle except by reducing debt. The difference between mass bankruptcy and debt deflation and reducing debt by inflating it away just means different people get hurt. The first way is quick and painful for borrowers. The second way is slow and painful for savers.

    Either way reading between the lines it seems to be if they can't inflate the debt away they will blow up the system with too much debt. Now more than ever I can't wait for my deposits to mature, I think I will buy residential property as these policies are forcing me to do. Sadly I will need some debt as everything is so expensive. It is overpriced but looking better than money in the bank long term. I just wish we could have had a correction before I do this but I guess that is not possible.
    Why residential?

  11. #446
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    Quote Originally Posted by fungus pudding View Post
    Why residential?
    Probably because it would be local and I may need a house one day and my kids will definitely need a house one day.
    I could buy a residential property with manageable debt and if there is a downturn I don't have to see how much I lost in the business herald each morning. Mentally it would be more bearable losing on a house.

    Listed property companies/trusts seem to be the best option for commercial real estate for yield, tenant and building risk etc. Proportional property investments don’t appeal due to liquidity, single tenant risk as well as debt.
    A single small commercial building that I could afford would probably have the riskiest or most marginal tenant.

    I prefer the power generators to the property companies and I like Vector, Auckland Airport, Ports of Tauranga etc but I was hoping to buy at a decent yield. Like in 2008/09 with so much invested in index funds if punters get scared and withdraw their funds good companies get hit hard when they have to cover redemptions. That seems unlikely to happen again as cash is just a matter of faith and this faith being tested. I have very little faith left so feel I have to get rid of my savings.
    Rural land seems expensive and anywhere I could afford a decent chunk of land say 50Ha or over is in the wops. Lease income in these areas are most likely not high and real estate is all about location.
    Southern Cross Partners is offering 6.25%-8% for loans that are apparently backed by a first mortgage. Sounds good but I would need to learn how to check with the land transfer office that my mortgage is secured over the land. In other words, I have some doubts about finance companies claims.

    I say I have capitulated but in my heart of hearts don’t believe that there will be no downturn, but I don’t know when it might happen or how severe it might be.
    I would prefer to invest for yield than applying the greater fool theory but to date I have been the fool, but I believe this is largely due to central bank actions of historic proportions. E.g. lowest interest rates "ever" and they seem more likely to drop further than rise. Unconventional monetary policy by USA, Japan, China & Europe. This is now not unconventional and again the likelihood is that it will become more unconventional. This tells me something is wrong with the current economic thinking but apparently whatever they do now is better than the horrors of deflation.

    What would you suggest as an investment??
    Last edited by Aaron; 16-05-2019 at 01:05 PM.

  12. #447
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    Gone silent on me FP?
    What would you suggest. I think from previous posts you now have a preference for listed property companies over directly buying buildings. Out of interest what would be your minimum net yield for purchasing a building. I appreciate a lot would depend on the building location, condition etc and the tenant but rough ball park at what minimum net yield would you say it is too expensive for a commercial building?

  13. #448
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    Aaron ..you might enjoy this

    https://affluentinvestor.com/2019/05...hat-feeds-him/

    Capitalists have always threatened capitalism more than socialists. When they’re not defrauding stock holders as did Enron, being fined by the government as happened to Wells Fargo, having the state bail them out of trouble like General Motors and the biggest banks, killing people with faulty software as Boeing did, or bribing politicians for favors and protection, capitalists are busy trashing the capitalist system that made their success possible. Warren Buffet, Bill Gates, George Soros, and others have done it. Now Ray Dalio, the founder of Bridgewater Associates, stabs the invisible hand that fed him with his posts “Why and How Capitalism needs to be Reformed.”
    “In a roaring bull market, knowledge is superfluous and experience is a handicap.”

    –Benjamin Graham”

  14. #449
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    People who w**k on about capitalism generally have been brainwashed by the repetitive smaller government, less taxes, better society mantra. Mostly they are people who have done OK for themselves and want to protect their wealth. The only ones who can take it away are the govt. through redistribution of wealth. You will note there are no poor libertarians and for all their dislike of govt and centralisation are usually keen on protecting property rights through govt via the police i.e. being strong on crime.

    Then you have lefties who think the govt is the answer to every problem in society, they usually aren't concerned about the need to tax as they don't have much and won't be affected. They are big on "rights" but not so much on personal "responsibility" as in you are probably the biggest reason you are where you are, it is not govt or central banks(as I like to blame for my bad run).


    Neither left nor right seems to care about the financial system. This article discusses what is expected in the next recession without debate, everyone is expecting central banks to take this action. They don't discuss whether this will help long term or solve what could be the most pressing issues of the day such as stagnation and wealth inequality, is it leading to populism and raising the risk of war?. Climate change is it manmade if so how does constant growth and consumption fit in with it all?.

    https://www.cnbc.com/2019/05/28/next...last-time.html

    Articles like this confirm that I need to get rid of cash even if the investment is overpriced.

    Still waiting on FP's advice about where to go for the best and safest yields.
    Last edited by Aaron; 29-05-2019 at 08:39 AM.

  15. #450
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    Ray Dalio seems pretty smart although he always seems to avoid suggesting taxation as a way to redistribute wealth. I imagine he would like everyone to "grow" out of poverty. He has a free ebook regarding debt crises I have got through a chunk but have been lazy again. Will redouble my efforts because if anyone understands how the economic system works it is Ray Dalio.

    We have heard it many times the most important price in capitalism is interest or the cost of capital. The fact it is centrally controlled seems to elude most capitalists.

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