Your phoenix stuff general - do the properties have 20 year leases - where RENT can't be raised for 20 years? Many deals I am seeing on these triple net properties being sold to commercial real estate guys is the norm over here in USA - Take eckerd/cvs for example - they sell thier building to some investor right now while PRICES are HIGH - lock in a 20 year lease with new investor where rents cannot be raised or raised only a little - now if INFLATION takes off - this dumb sucker is screwed - he cannot RAISE RENTS!! Eckerd get all that free money now and not have to worry about inflation - sure in 20 years maybe so - but that is too long term horizon for many! If investor goes broke - NEVER fear - fed is here!
Mogambo - Bernanke, is already on record as saying that the Federal Reserve stands ready, to buy stocks, bonds, houses, other assets, and even raw land, to keep deflation from happening! The Federal Reserve has already bought up, for its own enrichment, $725 billion in US debt, so what's another few hundred billion dollar's worth of assets disappearing into the greedy maw of the Federal Reserve? Hahahaha! We're idiots!
... that all may not go according to plan, and instead, go in line with history,
BINGO GENERAL! For 314 years in the USA - derivatives guy points out that the plan was inflation and soft currency and that is a strong testament to its staying power over long term history!
Ever since paper currency was invented in the West in 1691 the informed have used these bubbles to take buying power from every one else. 314 years is a powerful statement of world events. In the end the people in the know take all the money because they make the rules.
The real question you should be asking yourself, do banks really lose buying power of their money when bailouts, hyperinflation, or deflation occurs. If they make all the rules, they always come out on top.
universalacid.blogspot.com
"They will always lose"
In college one of my political science professors tossed off an offhand comment in his first lecture to the effect that "over time, the modern state tends to expand." He meant expand both in intensity and scope - government becomes more effective at exerting power, and starts to bring more areas of life under its control - but especially the latter. This is historically obvious, even if you look simplistically at the proliferation of government agencies, not just in the U.S. but in all industrial countries. We started with State, Treasury, Justice, and War, and look where we are now*. I asked him what that meant for people hoping for "smaller government" and he kind of shrugged and basically said it wasn't in the cards.
Tyler Cowen agrees:
I have a simple theory: in any period of time, government grows as large as it can, given available technology and a few cultural constraints. For better or worse, voters support this growth. ... Short of technological retrogression and negative economic growth, we should not expect government to ever get smaller. ...
The complainers are the libertarians. They will always lose, and they will always be intellectually important.
*added cabinet-level agencies are Interior (1849), Agriculture (1889), Labor and Commerce (1903, split into two in 1913), HHS and Education (1953, split in 1979), HUD (1966), Transportation (1967), Energy (1977), VA (1989), Homeland Security (2003).
where all lost something, and debtors lost everything ... key concepts and words:
No Bankers don't lose long term - Mogambo has this to say:
321gold.com
E. Petersen, writing on FMNN.com feedback, is a guy that comprehends the problem exactly when he writes "The bankers get their profits off the interest from the money they create out of thin air and we get stuck with the byproduct of inflation robbing us of our purchasing power. We loan them money, yet we get stuck with reverse interest (inflation) and they get the profits." Exactly! Exactly!
But continuing with my hissy-fit about the banks, get a load of this: In 1991 total loans and leases in the nation's banks was about $1.2 trillion. Now, only fourteen years later, loans-and-lease debt in the banking system is $5.4 trillion! Debt owed to the banks more than quadrupled!
And it gets worse! In September 1991, total real estate loans in the banks totaled $398 billion. Last week, total real estate loans in the banks totaled $2.8 trillion! 700% more mortgage debt! In four short years! Seven times as much mortgage debt! My God! And you are NOT in full lock-down mode somewhere safe, gobbling tranquilizers like candy, with your finger nervously on a trigger? I am impressed! You must have nerves of steel! Then that means you did NOT hear Dr. Kurt Richebächer when he said that "The thing to realize, of course, is that the housing bubble is many times more dangerous than the stock market bubble, because it involves the whole banking system."
.....I mean, it is inconceivable to me that we're going to stand around drooling all over the front of our shirts in our incomprehension of the simple fact that the banks are ready to create enough money, out of thin air, for themselves to buy- for themselves! -all the property and assets in the country! The banks would own everything! And we Americans are standing around with these blank looks on our stupid faces like this is, duuuh, all okay with us! Duuuh! Hahahaha! No wonder we are going to be destroyed: We're idiots! We are truly, as a nation, a bunch of first-class dumbbell halfwits.
But this is not about how Americans are the biggest bunch of ignorant nincompoops in history, squandering the entire wealth built up by own forefathers, until we are now just the idiot inbred offspring who have spent all the money, and are, even worse, in debt up to our ears. Oops! Wait a minute! I was wrong! This IS about how Americans are the biggest bunch of ignorant nincompoops in history! My mistake!
....But the world of gold is as full of crooks as everywhere else, as the World gold Council also notes that the central banks are so desperate to keep the price of gold from rising and exposing the inflation that is actually roaring that "The Washington Agreement to limit gold sales to 500 tons is a farce. This past fiscal year ended 9/3/05, they sold at least 552 tons and the figure may actually be 574.6 tons. So much for transparency and veracity." See General - they already are doing what bankers do best - ask the hunt brothers about REAL SUPPLY AND DEMAND - during ww2 and manhatten project - Silver price was manipulated so silver could be used to make components to create nuke bomb - nothing little guy could do to profit
...I have read a little about the new tax plan, and I have heard a little about the tax plan, but I will not go into many of the details, as the important point is this: The same amount of tax revenue will be raised. Taxes are not going to be cut. The same huge, strangling wad of money will be ripped out of the economy by either taxing businesses (who merely add the taxes they pay into the prices they charge for their products and services, thus creating literal price inflation whenever taxes are increased), and/or reducing the buyer power of the final consumers (by reducing their incomes as a result of the higher income taxes) at the same time as they are paying the higher prices on all goods and services (that came from the increase in taxes that businesses pay) and/or the decline in purchasing power of the dollar, as measured in the inflation in prices. So, one way or the other, nothing will really change. The only difference is WHO is paying the taxes up front.
This should have enormous initial effects, as lots and lots of money comes out of things that no longer have a tax advantage (thus incurring a tax liability on any gain), and a bull market in something else, which is, as I understand it according to Jim McTague of Barron's, "savings, corporate investment and exports." Dividends are to be tax-free, see, which should, theoretically, drive up the value of stocks, which is, I figure, half the purpose of this whole tax plan idea in the first place. And the plan will, theoretically, drive DOWN interest rates as a result of all of this new supply of funds stemming from the increased saving, which is probably the other half of the purpose of this tax plan.
General what effect do you think taking away capital gains and tax on dividends will have on stock and real estate purchases - you and your little lump of metal trying to fight the lords of DARKNESS - I am not betting on the little guy
Now lets turn to El Mat in Iran:
But many experts and officials say the ban will only cause Iranians to turn to the black market for western video tapes or to foreign satellite television broadcasts.
Elvis and hot dogs - here we come! The General collects DVD's during hurricanes - what we WANT and what he NEED and what is junk. People VALUE movies - not GOLD.
inflation of everything we need,
I dont NEED gold, golds FLAW is it requires other suckers to think it has VALUE - Bernanke is buying CIGARETTES - I know many people that NEED cigarettes - ALTRIA - but not GOLD. I remember story being posted about army guy in korea in the 50's who tried to sell gold watch to get hooker - he could not - pawn shop was flooded with gold (no one really needed it) - however he was able to take a pack of marlboros and get that hooker - if you search SI I bet you find that story in more detail. CONSUMER STAPLES we NEED - VDC where I have some money. As cigarette prices go up - I can make more and more money. GOOD CASH FLOWING investments that can PROFIT from inflation. Not locked in 20 year leases!
deflation of everything we have,
I have a couple gold coins on the shelf collecting dust.
explosion, recession, stagnation, implosion, desperation, dissipation, depression, confiscation, redistribution, evaporation, revolution ... rebirth
You say maybe 20 years from now - if so time to get those free money loans and ride the wave in this business cycle - until I see Oprah come on TV and tell everyone to BUY GOLD - instead of buy OPRAH perfume - then we still long way from government reset.
Remember Europe, Canada, New Zealand do interest rate targeting - previous econ blogger say that is like going blind backwards in an obstacle field - too funny!
bloomberg.com
New Zealand Raises Key Rate a Qtr-Point to Record 7% (Update2)
Oct. 27 (Bloomberg) -- New Zealand's central bank raised its benchmark interest rate a quarter point to a record 7 percent and said it may increase borrowing costs again after consumer spending fanned inflation to a five-year high.
``The prospect of a further tightening may only be ruled out once a noticeable moderation in housing and consumer spending is observed,'' Reserve Bank of New Zealand Governor Alan Bollard said in a statement released in Wellington today. ``We see no prospect of an easing in the foreseeable future.''
Bollard, who is tasked by the government with keeping inflation between 1 percent and 3 percent, has raised rates eight times since January 2004 to the highest of any nation with the top credit rating at Moody's Investors Service. He said he may raise rates again because consumer borrowing and demand in the $97 billion economy is rising too quickly.
``We have seen ongoing momentum in domestic demand and persistently tight capacity constraints,'' Bollard said. ``We remain concerned that inflation pressures are not abating sufficiently to achieve our medium-term target.''
Bollard, 54, last raised rates in March. Thirteen of 14 economists surveyed by Bloomberg News forecast he would raise interest rates today. His next review is on Dec. 8.
Consumer prices rose 3.4 percent in the year ended Sept. 30, the fastest pace since December 2000. In September, Bollard forecast annual inflation would rise to 3.9 percent by March 31 before declining to 3 percent by December.
Central Banks
New Zealand's benchmark is 3.25 percentage points more than the Federal Reserve's target. Fed policy makers have raised rates six times this year. The Reserve Bank of Australia last raised interest rates in March. Central banks in South Korea, Thailand, Indonesia, Taiwan and the Philippines have increased rates this year to curb inflation as fuel prices surge.
The yield on a three-month bank-bill futures contract maturing in December rose 2 basis points, or 0.02 percentage points, to 7.41 percent at 10:10 a.m. in Wellington, suggesting traders expect another increase this year. Investors and economists are less convinced.
``There are tentative signs things are slowing,'' said Peter Scobie, who helps manage the equivalent of $2.2 billion of fixed interest and cash at AMP Capital Investors New Zealand Ltd. in Wellington. ``It's not a foregone conclusion.''
House Prices
Bollard said borrowing against the increased value of homes was underpinning consumer spending. House prices rose 15 percent in September from a year earlier.
``The most serious risk to inflation is the continuing strength in household spending, supported by a relentless housing market and rapid growth in mortgage lending,'' he said. ``Borrowers and lenders alike need to recognize that the current rate of debt accumulation is unsustainable.''
Increased borrowing and consumer demand for imports has seen the nation's current account deficit, the broadest measure of trade, widen to a record in the year to June.
``The correction of these imbalances and associated inflation pressures will require a slowdown in housing, credit growth and domestic spending,'' Bollard said. ``We also expect a significantly lower exchange rate.''
The longer these adjustments take, ``the more disruptive they are likely to be,'' he said.
Rising Currency
The local dollar's 3.1 percent gain the past month is the best performance of 16 major currencies tracked by Bloomberg. The currency bought 70.19 U.S. cents from 70.21 cents before the statement.
Bollard said economic growth is slowing, particularly amongst exporters.
Business confidence fell to a four-month low this month, according to a survey of 551 companies by National Bank of New Zealand. That's equivalent to annual economic growth of 1 percent in the year ahead, according to John McDermott, chief economist at National Bank in Wellington.
``We expect the housing market will trudge on,'' McDermott said today. ``For consumer spending, the official numbers will be strong, but by December Bollard will have the anecdotes about how pre- Christmas trading is looking. If it looks like a shocker, he won't move.''
The economy expanded 3.1 percent in the year ended June 30, according to government figures last month. Growth will slow to 2.4 percent in 2005 and 2 percent in 2006, Bollard forecast on Sept. 15.
Retail Sales
``Our sales are looking pretty flat,'' said Rick Fala, chief executive of Methven Ltd., an Auckland-based supplier of bathroom fittings. ``Higher interest rates means existing home owners are frightened off buying new homes.''
Still, many home owners are opting to renovate, which is a more affordable option, Fala said in an interview yesterday.
``I don't expect a hard landing,'' he said. ``Someone renovating their own home is prepared to pay for quality.''
Approvals to build or renovate homes fell 20 percent in the eight months ended Aug. 31 from a year earlier, according to government figures.
Methven's Fala said he raised prices on Oct. 1 to pass on the increased cost of raw materials, in particular the brass used in taps and other fittings.
Express Couriers Ltd., New Zealand's biggest courier business, will add a 1.8 percent surcharge to its prices from Nov. 1 to help make up for rising fuel costs, Chief Executive Jim Quinn said in a letter to customers last week. |
