Depression in the USA - Deflation verus Inflation

[mark100]

57% might seem a big number but I was actually suprised by the number of 233,000. That doesn't seem that much in a market the size of the US

[stevo1]

Bloomberg reported recently the problems banks are having forclosing.If the householder challenges the bank for documentation for the loan often because the loans have been bundled in the sub prime mess they have lost track of the documentation on who owns the loan.Therefore if the householder challenges the courts are tossing out the banks right to forclose if they dont challenge the bank forcloses.Dont think it will take long for the word to get out leaving banks unable to forclose as the value of the asset depreciates more while the home "owner" sits there.Certainly they wont be taking care of the place .Potentially more losses coming up for the banks.

[tricha]

Russian passion for stocks and shares

By Duncan Bartlett
Business reporter, BBC News, Moscow



Micex is Russia and Eastern Europe's biggest stock exchange


Russia's enthusiasm for capitalism is evident at the thriving Micex stock exchange in the heart of Moscow.
The exchange has seen its volumes double every year since it opened in its present form in 2005, and it now trades $17bn (412bn roubles) worth of equities, bonds, derivatives and currencies every day.
But visitors to the building will not meet any excited bankers shouting and waving their hands.
Like most modern exchanges, Micex operates entirely by computer.
Planned economy
Western investors account for about 30% of Micex's trade, reflecting foreign enthusiasm for the new Russian economy.

I prefer not to talk about politics - Russia used to be a planned economy with no stocks


Elena Kochetkova, Micex


In 2007, foreign direct investment in Russia amounted to $52bn, or about 5% of Russia's Gross Domestic Product.
Many international banks expect that figure to rise.
Micex official Elena Kochetkova wants to encourage more foreign trade, but she admits the operation would probably shock the communists of the Soviet era.
"I prefer not to talk about politics," she says. "But as a Russian person, I appreciate my history. Russia used to be a planned economy with no stocks.
"We're glad the exchange has been successful, and within ten years we hope the wealth of our people will increase."
Soviet repression

Follow the trading day on Russia's Micex stock exchange

In pictures


In the pre-Soviet era, Russia was regarded as a world leader in terms of finance.
The first mention of the construction of an exchange in Merchant's yard in Moscow dates back to 1790, and by the middle of the 19th Century there was a thriving trade.
Moscow's main stock exchange even survived the Bolshevik Revolution of 1917, although the centralised Soviet economy later choked demand for long-term credit, the lifeblood of exchange activity.
We are much closer to capitalism than we were 15 years ago


Alexei Rybnikov, Micex chief executive



Russian inflation bites


But when the communist system collapsed in the early 1990s, the financial markets developed rapidly, with much less control and regulation than similar operations in the West.
Now, Micex claims its systems are in line with international standards, and it ranks as the 17th largest stock exchange in the world.
Progress
Some investors have been worried by signs of government interference in business.
Russians are getting richer, and looking for ways to spend money


The former chairman of the oil company Yukos, Mikhail Khodorkovsky, was jailed for fraud and tax evasion and his company was taken away by the state.
However, Alexei Rybnikov, the chief executive of Micex, says other business people should not be worried.
"I think it is a bit of a misunderstanding, portraying the situation as if the Russian government is reversing the privatisation trend and trying to get back state ownership in recently privatised Russian companies," he says.
"What the state is actually doing right now is putting together various state-owned assets to form state-owned holding companies which control some of the sectors of the Russian economy."
As further evidence that the government is keen to privatise some of its assets, he points out that many companies which are majority owned by the state, such as the gas giant Gazprom, have shares listed on the exchange. Mr Rybinkov remains proud of Russia's progress. "We have a lot of economic freedom, we have modern and well developed capital markets. We are much closer to capitalism than we were 15 years ago," he says.

[jke_brown]

They say share investing is risk/reward management, surely risk have reduced with current market being 20% down in value to what it was few months back?

ASX200 was up 3 days in a row, I am watching closely.

[tricha]

They say share investing is risk/reward management, surely risk have reduced with current market being 20% down in value to what it was few months back?

ASX200 was up 3 days in a row, I am watching closely.

Sure risk has been reduced jke_brown, but I believe this is the suckers part off the cycle, suck the last bulls in . Wait till the credit card subprime hits the market, whammo.







Fannie Mae hit by housing gloom

The housing crisis in the US is threatening economic growth

US mortgage giant Fannie Mae has posted a $3.55bn (£1.8bn) loss for the three months to the end of December.
It blamed rising home loan defaults and set aside $2bn to cover further bad loans, warning the US housing slump could still get worse.
The quarterly loss cut into full-year earnings and the firm reported a loss for 2007 of $2.05bn, compared with a profit of $4bn for the year before.
It said it expects US house prices to fall between 5% and 7% in 2008.
We are working through the toughest housing and mortgage markets in a generation


Fannie Mae boss Daniel H. Mudd


The forecast was lower than previous predictions of a 4% to 5% decline.
"We are working through the toughest housing and mortgage markets in a generation," said president and chief executive Daniel H Mudd.
"Our results for 2007 reflect the challenging conditions in the market we serve," he added.
Official data out this week shows new and existing home sales and prices plunged in January, while the time it will take to shift unsold homes rose to 10 months.
More difficulties
Fannie Mae is the largest buyer and guarantor of US mortgages, accounting for at least one in five home loans nationwide.
It has little exposure to sub-prime loans, those given to borrowers on patchy credit or on low incomes, which are at the root of the housing and subsequent credit crisis.
Thus its poor results - much worse than expected - show the problems are so deep that creditworthy house buyers are now struggling, analysts say.
Fannie Mae said it expected to lose money this year on eight to 10 of every 1,000 mortgages held in its $2.4 trillion mortgage portfolio.
The firm, together with Freddie Mac, were created by the US government to make it easier for more people to get on the housing ladder. They were later privatised, but are still known as government-sponsored enterprises and are still able to borrow at a lower rate of interest, because bond markets believe that the US government would not allow them to go bankrupt. Freddie Mac is due to report its results on Thursday.

[fihr]

So Tricha, are you sitting out of the market now, or picking up some stocks?

I am in two minds. I think it might take all year for enough information to come through to know what is going on. At the moment, the bad figures just seem to keep coming.

Although some themes might offer some havens. The current classics being resources, emerging markets and BRIC economies, gold, infrastructure and food. Still, I am nervous about Brazil and Russia - too much state interference, not to mention people being shot, and I do wonder if the China bubble bursting after the Olympics might have some credence in the short term - though the long term story looks good to me.

Has anyone any thoughts on using ishares to access emerging markets?

[tricha]

So Tricha, are you sitting out of the market now, or picking up some stocks?

I am in two minds. I think it might take all year for enough information to come through to know what is going on. At the moment, the bad figures just seem to keep coming.

Although some themes might offer some havens. The current classics being resources, emerging markets and BRIC economies, gold, infrastructure and food. Still, I am nervous about Brazil and Russia - too much state interference, not to mention people being shot, and I do wonder if the China bubble bursting after the Olympics might have some credence in the short term - though the long term story looks good to me.

Has anyone any thoughts on using ishares to access emerging markets?

Thats it in a nutshell Fihr, Inflation, Inflation, Inflation

And the answer to it , does anyone out there have an understanding of where this is leading to.

Rampant Inflation and it is ramping!

How do we preserve our capital in this inflationary cycle, when it last happened I was only eighteen, so I did not care about it or have a clue. Wages kept going up and so did everything you bought.

Hence a new Thread coming.

P.S Changed tact due to sharemarket correction\losses and at the moment hold,

Gold - CTO

Oil - NWE, NZO, OEL and just re-entered ARQ.

Lithium - ADY ( And I think a dose or 2 of this might help my skitzo behaviour )

[fihr]

I know someone who made their fortune in the last inflationary cycle - inflation was 3% higher than interest rates so they bought assets (property).

[tricha]

I know someone who made their fortune in the last inflationary cycle - inflation was 3% higher than interest rates so they bought assets (property).

How does that compare to now, when houses soared above inflation recently and u might say, house prices are to high?

[Te Whetu]

If that is the case then switch assets... if you can get a situation where inflation is greater than interest rates then all you need to find is an asset that can be easily leveraged.

While property is one of the most easily leveraged asset classes, there are others that you can leverage or have inbuilt leverage. HOWEVER even some property has potential, Auckland apartments are now selling for semi-reasonable amounts, there will most likely be some places where cash flow positive properties are popping up.