Financial Armageddon!!

[Keys]

Sorry Keys.
I don't understand when you say..." the banks steal your liquidity..."

My definition of a liquid asset is cash, which is usually kept in the bank. What is your definition?

[speights boy]

Yes cash would be one.
Another would be Govt debt.
Council debt.
Shares and Bonds in strong companies providing essential services and commodities.
Gold.

If it's a liqiudity crises that is being envisioned then I agree that liquidity will be affected while the Govt recapitalises the banks.
It will return however.
When it does, and the banks demand their money back from over extended borrowers, those who own debt free assets that are in demand from others will be able to pick up some cheap assets.

If it is a total worldwide collapse of all markets apart from bartering a warm coat for two legs of lamb that is being proposed; then at least the internet won't be around for me to read anyone saying..."see, I told you so, but no one would listen"...

[TheLiberalLeft]

Confused. If I'm supposed to buy then sell before the collapse, but the banks or govt are to trim the money in my accounts, where am I supposed to put my cash pile? Stacks of baked beans? Mattress? Do tell as its a serious question.

[cube]

Surely the best position to be in is owing the bank money, rather than the bank owing you

[drelly]

Confused. If I'm supposed to buy then sell before the collapse, but the banks or govt are to trim the money in my accounts, where am I supposed to put my cash pile? Stacks of baked beans? Mattress? Do tell as its a serious question.

Start digging your survival bunker. Buy beans. Make sure you have good ventilation in your bunker.

[Damap]

Debt free real estate would be my pick for safety!

[Perry]

How many contemporary posters are in
that enviable position, I wonder?

[speights boy]

It can't be that enviable Perry.

Otherwise there would not be so many postings such as...

" recycle equity, maximise rental borrowings, interest only, rinse and repeat..."

It is a deliberate investment choice, one which works very very well ...............until suddenly it doesn't.

Then, as I said previously...

Others simply see it as a transfer of wealth from the overly indebted to the liquid rich.
The same as happens during every financial crises.

[Perry]

I wonder if you implicate the 'moving goal posts syndrome.'

It's a question I've asked some PIs. It's even made me
wonder if it's addictive. In addition to the many postings
you've referred to, there are others about goal setting.
Many Forumites have expressed the view that PI gives
them choices (one day).

Must be hard when those posts are so mobile.

Maybe there's too much avarice involved, so some just
keep at it?

Have we had a poll on the number of Forumites who are
debt free? I can't recall. Shall we have one?

[speights boy]

Shane D (a wise investor it seems) started a thread a few days ago.
It made me read the entire thread he had as a link in it.

This from a posting in Nov 2007.

I am sure things will tighten up from now on for those sailing close to the wind,
I am ready for some more bargains to come across the table, planning on buying a few more over the next couple of years or so to sit on for a few years with the view to eventually selling them to pay for our mansion on the coast which we plan to move into some time in the next 4-6 years.
Decided we will hold the money we are saving up for it in realestate as it appreciates quicker in realestate than in the bank.

There were other like minded ones.
Sure, hindsight is 20/20....but for goodness sake; NZ had a relatively small problem in 08 and 09.
The "confidence" shown in postings back then is an enlightening read 6 years later.

We had a chap posting about a week ago asking about how to get more out of the banks.
He mentioned 50 properties as a figure....I assume this was a goal.
All very well, but you better have a backstop in case the music stops.

The simple statement...

There is nothing like real estate to keep you poor while making you rich

.....has an embedded warning in it.

[Commercial Dan]

What worries me is that when the banks get in trouble, like what happened in the US in 2007-08, then they will just call loans in; they will force sell and we will have an abundance of property on the market. I think the crap will hit the fan when leveraged options can't be paid by a country, then it will collapse.

It is quite probable that there will be a re-set of the financial system in some way, should happen within 5 years.

Have no idea what they will come up wih.

[Davo36]

What worries me is that when the banks get in trouble, like what happened in the US in 2007-08, then they will just call loans in; they will force sell and we will have an abundance of property on the market.

Well that's what used to happen but it didn't happen in 2007-2009. Banks did all sorts of things to help borrowers out. They offered mortgage payment holidays, capitalised interest etc.

I reckon it's basically impossible to forecast what will happen.

[TheLiberalLeft]

Perhap's Dan is seeing the price of gold falling and needs to rark up concern and worry about the banking system once more.

[speights boy]

Well that's what used to happen but it didn't happen in 2007-2009. Banks did all sorts of things to help borrowers out. They offered mortgage payment holidays, capitalised interest etc.

And that is for one simple reason.

In Oct 08 the initial Retail Guarantee was $1mil per depositor per bank; and
an UNLIMITED wholesale Guarantee....the total of which was huge if the banks had chosen to have all their funding guaranteed.

Remember the banks could opt in to cover any amount they wished.
They ALL opted in.

The return for this guarantee was that the banks would treat mortgage holders with the tolerance you described.
They had NO CHOICE.

Dr Cullen simply told them , no mortgage relief, no guarantee.

[Davo36]

Is that on record somewhere SB?