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Yep-All assets crash-and cash is king (with deflation)--it also makes debt take a quantum leap.
Its a dirty word for property investors..(unless your a first home buyer)
Its a dirty word for property investors..(unless your a first home buyer)
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On December 29th the Greek parliament failed to elect a president, forcing an early snap election to be called for January 25th.
The euro crisis is entering a new, highly dangerous phase, and once again Greece finds itself at the centre.
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inflation is now so dangerously low that the euro zone threatens to tip into years of deflation and stagnation worryingly reminiscent of Japan in the 1990s.
The continent’s leaders have largely failed to push through the structural reforms that could make their economies more competitive. When voters see no hope, they are likely to vote for populists—and not just in Greece.
As 2015 approached, most of Europe’s leaders assumed that the worst of the euro crisis was behind them. The early Greek election shows that hope was premature.
Populist parties of left and right that are against the euro, explicitly or not, continue to gain ground in many countries—the leader of Podemos, Spain’s highest-polling party, welcomed Mr Tsipras’s success in forcing an election this week.
http://www.economist.com/news/leader...7334-come-comeLast edited by eri; 30-12-2014, 10:27 PM.have you defeated them?
your demonsComment
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With its anti EU and immigration stance giving rise to the UKIP vote; there will be plenty of interesting politics in the UK in 2015.
Immigration beats economy as number one worry for UK voters: Pollsters say Britain is more concerned about migrants ...
- Immigration is the most important political issue to voters, pollsters say
- Public are more worried about Britain's borders than finances, YouGov say
- It's the first time since 2010 that the economy hasn't been the biggest issue
- Europe also soared as an issue for concern as Ukip moved up in the polls
Last edited by speights boy; 31-12-2014, 06:13 AM.Comment
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Given that they're heading towards 70 million in that country, it should be their biggest concern I reckon.Squadly dinky do!Comment
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Carry on Golfing Europe.....nothing to worry about.
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"The Europeans came into that meeting basically saying: 'We're going to teach the Greeks a lesson. They are really terrible. They lied to us, and we're going to crush them'," he said.
"I just made very clear right then: if you want to be tough on them, that's fine, but you have to make sure that you're not going to allow the crisis to spread beyond Greece."
German chancellor Angela Merkel did later retreat but only once it was clear from stress in the bond markets that Italy and Spain would be swept away in the ensuing panic, setting off a crisis across the economic and monetary union
"The conflict over austerity is politically explosive as it's becoming a conflict between Germany and Italy," says Joschka Fischer, Germany's former Foreign Minister.
Such political damage would be unforgivable even if EMU crisis strategy were defensible on economic grounds, but it is not.
Mass unemployment - 43 per cent for youth in Italy and 54 per cent in Spain - erodes skills. Youth is pure gold for ageing societies. It is being wasted.
Spain's car factories may be working day and night again after slashing wages by 27 per cent, exporting vehicles at a record pace, but this is a displacement effect within EMU at the cost of France and Italy.
It pushes the currency bloc as a whole further into a deflationary vortex.
As matters stand, the ECB's backstop plan for Italian and Spanish debt cannot legally be activated.
The German constitutional court has ruled that it "manifestly violates" the EU treaties and is probably ultra vires, implying that the Bundesbank may not take part.
http://www.nzherald.co.nz/business/n...ectid=11381549have you defeated them?
your demonsComment
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have you defeated them?
your demonsComment
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^ NZ better off, and Russia worse off.
That's what I call a win-win.Comment
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getting complicated
as nz heads for deflation
in some things
but not others
The New Zealand economy may be in its first six-month period of deflation in more than a decade, in the face of weak crude oil prices and global over-capacity, pushing the prospects of interest rate hikes out into 2016, according to Bank of New Zealand.
"Normally when you talk about deflation you are petrified," Toplis said.
"The wheels are falling off, there's a downward price spiral.
But there's zero evidence of that in New Zealand at the moment.
The single biggest thing is our ability to freely access world goods at low prices.
For New Zealanders that's a good thing unless you're a local retailer."
so over-leveraged property investors
should be ok
for now
in fact if interest rates remain low
the price of daily commodities fall
but rents rise
PI win all round
economists will knash their teethLast edited by eri; 09-01-2015, 08:52 AM.have you defeated them?
your demonsComment
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I think it will strengthen Wheeler's resolve to adjust other rules around bank lending to the over-leveraged.Originally posted by eri View PostComment
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So get in while you can!Comment
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That will work, as long as you have liquidity to meet any sudden bank demands for extra equity.Originally posted by Damap View PostComment
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WHEN does the level of debt in an economy become “too much”?
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To a degree, a higher level of debt is a sign of the greater sophistication of an economy.
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... the debt supercycle has come to an end. This is not because the overall level of debt has fallen; indeed, if one excludes the financial sector, the global level is still rising (see chart).
But in the developed world, monetary policy has failed to create a credit boom in the private sector, even with the help of zero short-term interest rates.
... the debt ratio is very hard to bring down in the absence of rapid economic growth, which the western world has found hard to generate.
For now, the developed world has reached a fragile stasis in which a high level of debt is only sustainable with very low interest rates.
Any attempt to push up rates to what were once normal levels is fraught with danger; Sweden, which started down the path in 2010, has had to cut rates back to zero.
But the tricky question is whether significant economic growth is achievable in the absence of rapid debt expansion.
Consumers will not want to borrow unless their wages are rising, but real wage growth has been sluggish; companies will not want to borrow until they see signs of buoyant consumer demand.
And governments are unwilling or unable to provide another burst of stimulus.
In sailing terms, it is rather like the doldrums, a patch of ocean where boats become becalmed.
Japan has been in the doldrums for more than a decade and has managed not to sink. But Japan is a relatively homogeneous society. Other developed nations might not be so lucky.
Greece, which may vote for a debt-repudiating government on January 25th, will be the first test.
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Debt is suppose to be used to fund new businesses and projects that lead to easier access to assets, doing things in better ways and increasing efficiency.
That would result in economic growth... when doing things takes less time, using fewer resources, and yielding better outcomes.
But the government stimulus went to fund debt so that people could
- buy extravagant cars (reliable transportation improves efficiency but the small dose of joy from financing a new car is unlikely to increase worker productivity so is ultimately a waste of resources)
- excessive houses (they should have spent the money on upgrading old homes with better insulation to reduce energy costs)
- wasted education (many degrees have a zero return on investment)
- inflated medical payments for people who have squandered their health
- and financing debt payments all resulting in a zero return on investment.
This type of debt stimulus won't stimulate the economy.
That would be the non performing debt that our government has been so keen to dole out.
Japan did the same thing.
They spent horrendous amounts of stimulus money, but stupidly, on infrastructure and projects that nobody used which provided no improvements in efficiency.
So they had new debt but the same tax revenue.
All of this is because governments everywhere are staffed with bleeding heart morons who want to get elected above anything else.
Politicians all need economics lessons so they stop getting us in these messes.Last edited by eri; 12-01-2015, 10:38 PM.have you defeated them?
your demonsComment
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So who will teach them?Comment
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