Financial Armageddon!!

[speights boy]

Never.
People simply like using up bandwidth pretending it will.

[Damap]

Well no one knows but my random cogitations are:
1. In 4 months when Greece comes back to the fore they may have a civil war on their hands. That won't be pretty.
2. The strengthening greenback is murdering the US economy, (like it wasn't already brain dead), I believe we could see things start to flounder there before Christmas.
3. Chinas ongoing stagnation is starting to affect every nation that trades with them, (negatively).

so I reckon New Zealand is likely to see some pressure by Christmas. By pressure I mean Hoki instead of Salmon, one less round of golf in the holidays and driving the golf a bit more than the Remuera tractor

[eri]

tis interesting how the nz economy was roiled by the usa sub-prime meltdown

interesting enough to keep an eye out for the next black swan that could wing our way

fortunately

boring john

and his team of reliables

by luck or good management

seem to have kept nz's bow pointed into the swells

better than most

but as we'll still be sent pitching

by the next broken tsunami

some scanning of the horizon

is a good idea

[Damap]

Yes our isolation but mainly our banks insulate us I think Eri. It's much harder to get into trouble when you aren't stuck on stoopid like the US. it's not till you go there that you see just how fiscally irresponsible they really are.

[speights boy]

Yes our isolation but mainly our banks insulate us I think Eri.

Which is why Mr Wheeler is about to put another restriction in place in order to improve our banking exposure risk.
Heavy regulation in that sector is the safest bet.

[Damap]

Absolutely. IF we ever took an American model we would be so screwed. It's one thing the Aussies have done right. Keep our banks as profitable as possible.

[eri]

banks in the usa

were basically forced by the gov to make sub-prime loans

in the hope that it would force people who couldn't otherwise save

to save, buy houses, become better citizens

.............

that kind of wishful thinking + meddling with forces beyond their control + understanding

is something a labour/green alliance

would see as their DUTY

even if it wasn't in their manifesto

they would be pushing for something similar as soon as they get in again

even if the most likely outcome of a rental wof

is higher rents and less rentals

that won't stop them

they don't mind doing something wrong

as long as the are doing it for the right reaons

madness

[eri]

Housing prices nearly doubled between 2000 and 2006, a vastly different trend from the historical appreciation at roughly the rate of inflation.

While homes had not traditionally been treated as investments subject to speculation, this behavior changed during the housing boom.

Media widely reported condominiums being purchased while under construction, then being "flipped" (sold) for a profit without the seller ever having lived in them.^[76]

Some mortgage companies identified risks inherent in this activity as early as 2005, after identifying investors assuming highly leveraged positions in multiple properties.^[

Nicole Gelinas of the Manhattan Institute described the negative consequences of not adjusting tax and mortgage policies to the shifting treatment of a home from conservative inflation hedge to speculative investment.^[78]

Economist Robert Shiller argued that speculative bubbles are fueled by "contagious optimism, seemingly impervious to facts, that often takes hold when prices are rising.

Bubbles are primarily social phenomena; until we understand and address the psychology that fuels them, they're going to keep forming."^[79]

Keynesian economist Hyman Minsky described how speculative borrowing contributed to rising debt and an eventual collapse of asset values.^[80]

Warren Buffett testified to the Financial Crisis Inquiry Commission: "There was the greatest bubble I've ever seen in my life...The entire American public eventually was caught up in a belief that housing prices could not fall dramatically."^[38]

In the years before the crisis, the behavior of lenders changed dramatically.

Lenders offered more and more loans to higher-risk borrowers,[6][81] including undocumented immigrants.[82]

Lending standards deteriorated particularly between 2004 and 2007, as the government-sponsored enterprise (GSE) mortgage market share (i.e. the share of Fannie Mae and Freddie Mac, which specialized in conventional, conforming, non-subprime mortgages) declined and private securitizers share grew, rising to more than half of mortgage securitizations.[6]

Historically less than 2% of homebuyers lost their homes to foreclosure. But by 2009 over 40% of subprime adjustable rate mortgages were past due. (source: Financial Crisis Inquiry Report, p.217, figure 11.2)

Subprime mortgages grew from 5% of total originations ($35 billion) in 1994,[83][83][84] to 20% ($600 billion) in 2006.[84][85][86

]Another indicator of a "classic" boom-bust credit cycle, was a closing in the difference between subprime and prime mortgage interest rates (the "subprime markup") between 2001 and 2007.[87]


In addition to considering higher-risk borrowers, lenders had offered progressively riskier loan options and borrowing incentives.

In 2005, the median down payment for first-time home buyers was 2%, with 43% of those buyers making no down payment whatsoever.[88]

By comparison, China has down payment requirements that exceed 20%, with higher amounts for non-primary residences.[89]

http://en.wikipedia.org/wiki/Subprime_mortgage_crisis

[Damap]

Not really true Eri. They were encouraged but they weren't forced. They were "forced" to take money to lend in the bailout and pocketed it.
Wall St invented CDs. That was the root of all this evil, combined with Nixon breaking the gold standard. The whole US system is a rort. For example imagine if the NZ treasury was owned by Gareth Morgan or Graeme Hart?
The US Federal Reserves are privately owned monopolies. Unbelievable.....

[eri]

on such large events

i only go for a 'gist'

that works for me

my gist

does work for all

got a loser of a friend

who will refute everything i say

as he slowly drowns in a quicksand of debt + failure

he knows he's in trouble

but seems to enjoy arguing

more than listening, picking out what advice would work for him

and putting it into action

fortunately for him

nz is all about protecting him from his own poor choices

so he'll never get the kick in the pants that yanks get

when they wake up in a dumpster

[Perry]

How someone sees it:

[Perry]

So who can tell me when is this Financial Armageddon happening . . .??

I HAS happened, IS happening and WILL happen.
Depends on which part of the world one is in.

[eri]

i guess you could say

financial armageddeon

is when the monetary system breaks down

as Perry often says

all monetary systems have eventually failed

+ afaik

because politicians + joe public

eventually

can't resist the temptation

of debasing 'moneys' value

by making too much of it

and backing it up with too little

knowing when it will fall is a bit like jenga

[speights boy]

I HAS happened, IS happening and WILL happen.
Depends on which part of the world one is in.

I think people are exaggerating ...Financial Armageddon will NEVER happen.

[eri]