As usual, savers will be robbed, money holders diluted. < How do you see this sub-prime situation playing out? Are we indeed through the worse of it? >
Interest rates will be slashed. They are not through the worst of it, with price falls proceeding apace.
Markets will clear. The USA is on bargain ratings and getting cheaper. Americans will travel less, buy less overseas, foreigners will buy cheap USA holiday homes, buy American.
It's not just sub-prime, it's prime and all other debts and financial shenanigans which need to be tidied up, not to mention umpty $trillion in those derivatives thingamies.
There has been a huge borrow and hope trend with houses being bid way up on the basis of going up, rather than being the minimum house needed in which to live within one's means.
While interest rates don't need to be as high as they once did because people expect to live longer so the risk of them dying without spending their money themselves has gone down, with money detached from gold and depending on politicians' promises and electorates' good judgments, both of which are notoriously unreliable, interest rates need to go up to compensate for dilution.
The vast dilution of existing holders of currencies has been concealed by vast expansion of economies as populations have burgeoned and economic activity has not been totally stifled by Big Brother governments kleptocratting most of people's income.
But when populations and economic systems stabilize, then the game will be over. As Mq's new currency takes over from national currencies, there will be a stampede for the exits and the pixelation processes by Helicopter Ben et al will come to a halt and inflation will take off.
There has already been two years since peak housing mania and the slide started [in the USA]. That's quite a lot of market clearing. But mortgagee sales are soaring so there's a LOT of fun to be had yet.
Check out HOV, TOL and BZH Here's BZH finance.yahoo.com
As you can see, they had a LOT of fun while interest rates went to world record lows. Now, the party's over, the hangover is on, just as after the Biotelecosmictechdot.com boom.
Mqurice |
