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Discussion in 'Politics, Religion, Social Issues' started by Ugg, Jul 2, 2007.
How rough is the landing going to be?
This Is Fantastic News, I Cannot Wait To Go Shopping (yes I Am Shouting).
ugh. i'm supposed to go to london this fall. even with a free place to stay, a good number of free meals, and paying for my flight with miles, it's still going to be more than i can afford.
The landing is probably a year or three down the line. The Loonie is expected to reach parity by year's end. Heck, even the Peso is showing some small gains against the USD.
The housing market won't bottom for another two to four years. From this morning's "Daily Reckoning":
"In the last six years, America's middle class has run down its balance
> sheet in a remarkable way. Never before have homeowners owned so little of their own homes. In the '60s, homeowners barely mortgaged 30% of the value of their homes. Today, that figure is close to 50%. And it's happened
> while house prices rose at the fastest pace in at least 80 years. Thanks
> to rising prices, owners' equity increased $4.37 trillion since the
> beginning of this century. But, in a prodigious feat of borrowing,
> mortgage debt increased even more - $5 trillion.
But now, house prices are falling. A few days ago, Business Week reported
> that on June 25, according to the National Association of REALTORS, the
> rate of existing-home sales slipped 0.3% in May, to an annual pace of 5.99
> million units, while supply climbed to 8.7 months, the highest reading
> since June, 1992. The median price of a new home dropped 11% in April from the previous month, to $229,100, the biggest decline since 1970."
The big financial houses which have sold funds based on mortgages are in deep doo-doo.
And then you can add in the inflation factor. Some of us think .gov is lying through their teeth about the true rate. One fellow who does is at http://www.shadowstats.com/cgi-bin/sgs?
Apparently, the attack at Glasgow Airport and the the bomb in Piccadilly Circus has completely unphased investors.
London's expensive the way it is, I can't imagine what it's like at $2 to the ₤.
Brilliant, now I can buy stuff on US ebay from OZ even cheaper.
There's a lot of pressure on the Feds because of this situation. On one hand, if they lower the interest rates (to revive housing) the US$ will be doomed.. you can bet that the pound will go to 2.50 or higher.
On the other hand, if they raise the rates, the $ will climb back up, but housing will certainly be screwed - dragging the rest of the economy with it.
In my opinion, they need to focus on the dollar's global value.. temporarily. They need to raise rates to 5.50%.. sure the economy will take a hit, but it will be temporary. It will be a much better situation compared to the $ going down further.
Fingers crossed mate, cos I need to buy loads of stuff, including some mac stuff too!
I wonder how quickly this will accelerate dollar flight?
I think if the euro is to the point where it buys 1.5 dollars, there's going to be a huge dumping of dollars.
If that were the case, it would have a huge impact on oil producing countries' earnings and there might just be a real shift to the Euro and the Yen as petro currencies.
Apologies for the length
Ugg, you might find this of interest:
"When Poor Countries Get Rich By Chris Mayer
"There is no precedent for such fortunes suddenly finding their way into global financial markets"
- The Economist, May 26, 2007
When you hear the phrase, "There is no precedent," you should sit up and take notice. As this world totters on its way to some veiled future, it is in such small phrases that you will find big clues as to where the trade winds of the market might blow next.
In this case, your clue is the massive pool of money building in a way that has never happened before. It's bigger than the hedge fund industry - which makes so much noise and inspires so much comment. In total, these funds run into the trillions of dollars. Yet it is almost like a secret club. Few investors are even aware they exist.
Traditionally, this money has been content to sit on low-risk, low-paying investments – like U.S. Treasuries. That is changing. And where this money is heading next could have a huge impact on market prices - and on your investments.
"How and where this massive - and often secretively managed - pool of funds is deployed," opines the Financial Times, "will be one of the big investment themes of coming years."
On May 21, China announced its intention to invest in Blackstone, a U.S. buyout firm. China has $1.2 trillion piled up in reserves. It is the flip side of the U.S. trade deficit, you might say. That pile of money grows by about $1 billion every day.
Before May 21, China had been content to invest in highly liquid and "safe" investments - such as U.S. Treasury debt. Now, China let the world know that it would set aside about $300 billion this year to invest in things other than Treasuries.
Stratfor, a consulting firm, adds this: "That amount represents the single largest pool of cash that any government has thrown at anything, ever. Adjusted for inflation, the U.S.'s largest effort, the Marshall Plan, comes in at just over $100 billion."
China controls one of the world's largest stacks of foreign currency reserves. Yet there are other stacks of similar money out there – the excess foreign currency reserves of other foreign nations.
Andrew Rozanov, writing in the scintillating journal Central Banking, named them sovereign wealth funds (SWFs). As Rozanov says: "These are neither traditional public pension funds nor reserve assets supporting national currencies, but a different type of entity altogether."
Sovereign wealth funds control about $2.5 trillion in assets worldwide, compared with about $1.6 trillion in the hedge fund universe. And money continues to pour in. By some estimates, these funds could control $12 trillion in assets by 2015.
Where did these enormous funds come from?
Many of them were set up decades ago. But they've come on our radar only recently for three reasons, as pointed out by Rozanov: There are a lot of new ones coming online (such as China's); they are growing rapidly; and they are getting so large - on par with the largest public pension plans.
Governments created many of them with surplus revenues from oil, gas and other natural resources. The UAE and Norway and Russia all got the bulk of their dough from oil. Chile's funds came from copper revenues. Even Botswana has a $5 billion fund (the Pula Fund) flush with the proceeds of diamond sales. Not all of them are commodity related. Singapore and Hong Kong are exceptions.
So these governments are flush with cash and have set up sovereign wealth funds to invest the money. Today's unmistakable trend is to invest more and more of that money in private enterprise, stocks and real estate.
Norway recently upped the amount it will invest in the stock market. In the past, about 40% was set aside for stocks. As of last month, it became 60%. Norway runs a giant $300 billion fund. That's a lot of buying power. Russia, India and others are also in the process of setting aside more money for riskier assets.
As The Economist notes, "Sovereign wealth funds could soon become the most important buyers of such assets, and many others besides."
Consider China. For China to put its money to work in the U.S., it would, says the Financial Times, "have to become the biggest player in the U.S. market." To put even 40% of its staggering fund to work, China "would have to buy more than 10% of the capitalization of the Dow Jones Industrial Average."
Putting that kind of money to work could be politically impossible. After all, when China's CNOOC, a partially state-owned oil company, tried to buy Unocal, an American-based oil company, there was such resistance that CNOOC called it off. That may be why China's first purchase is in a private firm that does not own any "strategic" assets.
Still, China's appetite for natural resources is extraordinary. Just last week, China deployed some of its cash horde to acquire exploration rights in the oil sands of Canada. China National Petroleum Corp., the parent of NYSE-listed Petrochina, paid the Province of Alberta for the rights to explore 104 square miles in the oil sands. Two years ago, this same state-owned oil company paid $4.2 billion to acquire PetroKazakhstan. Clearly, many of the powerbrokers in China believe that their country's growing currency reserves ought to be used to acquire vital supplies of natural resources. The flourishing Chinese economy desperately needs many other commodities - aluminum, steel, copper, grains, clean water and more. So it would not be surprising if China put some of its money to work in these areas.
The Blackstone deal was just the first little spoonful behind an enormous appetite. Look for more headlines as China and these other giant sovereign wealth funds put their money to work in a history-making buying spree."
The US has gone from making and selling material things to creating "wealth" from inflated-value assets and spending the money on consumption. That's a one-way street, and it's all downhill...
Fortunately there's loads for free stuff to do in Nodnol
but even topping up my oyster card and vodafone account is getting more expensive. now, if i had a job where i were paid in pounds sterling...
Mate, if you were getting paid in £'s then you be in England and you'd probably be having to pay for your accommodation. Then you'd really be up the creek. I was renting a one bedroom council flat near Regent's park for £800 a month! That seriously blows.
YAY, our economy is in the crapper......
i'd probably be making in the £80k/yr range, and i'd pick up a small flat in london fields or somewhere for £240k. if i sold my current house in chicago, i could easily knock down the mortgage to half that, and have money left over.
£80k/yr for a £120k mortgage? no problem! i'd use some leftover money each month to buy USD.
Why on earth did you live in zone 1 london? Thats just plain foolish. You could easily pay £500 for the same in Walthamstow, Leytonstone or even Hackney. Serves you right for living in West London. Down with West London.
I could walk to work in 20 mins, and I was working 12 hour days. I like to keep life as uncomplicated as possible. And I like the area around Augustus st, you could see the local vege plots from the window.
Ah, I see. So an extra 45 mins on the Victoria Line didnt appeal then?
I'm in a nice two-bedroomer here in Hammersmith (furnished) for a bit over £230 a week
No. I really hate working long hours then spending extra time just getting to work and back. Just walking to Warren St to pick up the Vic line, was half way home plus having regent's park a stroll away really helps in london. Sometimes I'd get home at 3am and have to get up at 6am. These days I live in the mountains in OZ and I've given up working except for things I can do on the computer.
That's seems unbelievably cheap, I was talking a few years ago as well. I guess you can get lucky.
The US dollar is worth a penny compared to what it was before the Federal Reserve Act of 1913.
Higher prices means your money is worthless. Your house isn't worth more, it just takes more dollars to get one.
A single one ounce gold coin in the time of Julius Caesar would buy you a toga, a good leather belt, and a nice pair of leather shoes/ sandals. If you take a one ounce ($50 US mint) gold eagle and change it into fed notes you can get a suit, a nice leather belt, and nice leather shoes. ($650 US)
The difference is: The average middle class worker made 15-20 gold coins per month. That's like, $9,750-$13,000 US per month now. What's the average worker in America making? $17/ hour aprox. So, $2,720. Our purchasing power has been destroyed by inflation.
My great grandfathers 3,000 sq.ft. house was $800 in 1923.
They'd soon run out of gold doing that. Might need a citation but I think I remember reading somewhere that all the gold that's ever been mined on earth would fill a cube whose sides are 20 metres
There is over 8 billion tons of above-ground gold reserves. The space you're talking about is ridiculously small.
Plus all the silver, platinum, palladium and copper, I think we'd be alright.
Also, precious metals are under valued right now, and I think you'll see them make incredible gains against the stock market for the next few years. It wouldn't be insane to see silver hit $100/ oz. and gold hit $1300/ oz. in five years.
Hmmm a jeweller who made my wedding rings told me the cube with a side of 20 metres. I might need to check seeing as a cubic metre is about 20 tonnes and there's 8,000 cubic metres in a 20 metre cube that would be about 160,000 thousand tonnes of gold.
You reckon there's 8 thousand millions tonnes of gold. That's not a small discrepancy. But I find it difficult to believe even without doing the math that there could be 8 thousand million tonnes of gold mined.
EDIT: just checked on wiki,