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U.K. real estate prices may be dropping at a much faster pace than official reports indicate, according to the Irish agency that manages property loans acquired from bailed-out banks.
Reports since Britain’s vote to leave the European Union point to the value of land in central London declining by more than 10 percent in the past year, while house prices are 11 percent below their 2014 peak, said Frank Daly, chairman of Ireland’s National Asset Management Agency, known as NAMA.
“Our analysis suggests that the fall in U.K. prices may be much higher than official estimates,” Daly told lawmakers in Dublin on Thursday.
Of course, I don't know much about real estate prices. I thought that the report was interesting combined with the weak European "growth"(?) and changing landscape with interest rates.
“People see a developing black hole,” he said. This “increases the sense of there being little to lose for many” people.
Dec 9, 2016 9:32 AM
“There’s no non-messy way out of this,” said Luke Ellis, chief executive of Man Group, one of the world’s biggest hedge-fund firms with $80.7 billion in assets.
In a series of exclusive interviews with the Journal, hedge-fund executives overseeing around $280 billion in total highlighted a range of problems created by quantitative easing. The problems they highlight are precisely those that QE was designed to solve,
1. Damage to economic growth
Rather than kick-starting growth, quantitative easing may do the reverse. Some managers fear it distorts financial markets and undermines capitalism. That system relies on profit-hungry investors to differentiate between strong and weak companies—funding the strong while letting the weak die. QE, say some managers, doesn’t differentiate.
For instance, the Bank of England is buying the debt of firms it deems make “a material contribution” to the U.K. economy. That has led some investment banks and companies to create new debt especially for it to buy. The ECB has bought €48.2 billion ($51.2 billion) of corporate debt since June, but the hoped-for private-sector investment hasn’t materialized.
“What does a market do? It’s a voting mechanism,” said Michael Hintze, billionaire founder of hedge fund CQS, which runs around $12 billion in assets. “Instead you’ve got this 800-pound gorilla out there who’s hoovering up assets. “There’s a misallocation of capital and an opportunity cost to the real economy,” added Mr. Hintze, whose portfolio is up 30% this year, ranking it one of the world’s top-performing hedge funds. “It means GDP is not growing as much as it might.”
Some put it even more strongly. “It’s definitely destructive of economic growth,” said Crispin Odey, founder of Odey Asset Management, which runs $8.2 billion in assets.
“Capitalism dies a death,” said Mr. Odey, who sees government policy as the main factor influencing markets. His fund, a top performer after the credit crisis, is down sharply this year because of being too bearish. “It’s all policy. It’s the Kremlin. And I’m in the gulags.”
* * *
Damage to society
U.S. President-elect Donald Trump has said low rates have robbed savers.
Andrew McCaffery, group head of solutions at Aberdeen Asset Management, who looks after $170 billion in assets.
Ultralow interest rates mean the large part of the population with few financial assets begins to despair of how to generate income to fund retirement, he said.
Andrew Law, chief executive of New York-based Caxton Associates LP, which runs around $7.8 billion, said quantitative easing averted economic depression after the financial crisis.But he added: “The losers of QE are society, and democracy is also a loser, because central banks are not publicly elected officials.”
* * *
2. Deflation
Quantitative easing was also introduced as a way of increasing private-sector spending and raising inflation. Some investors even worried it would spark hyperinflation and rushed to buy gold. Instead, say some managers, it has led to deflation.
“It took me a long time to work it out,” said CQS’s Mr. Hintze. “It’s a very complex issue.” He said that massive amounts of liquidity mean that “liquidity’s not worth much anymore,” which leads to negative interest rates. “I do think it [QE] is a massive deflationary force. The reason is because money is worth less but the price of real assets goes up.”
Mr. Odey said quantitative easing leads to deflation because weaker competitors are kept alive by cheap debt as “zombie” companies.
Finally, hedge-fund managers see difficulty in ending quantitative easing.
“Central banks are sadly helping to create the ‘black hole,’ and the sucking noise and pull is getting bigger,” said Aberdeen’s Mr. McCaffery, “but you just have to keep going as your alternative options as a central banker are just too unpalatable to consider.
Using an analogy we first came up with in 2009, McCaffrey slammed the use of a drug placebo to keep the system intact: “More methadone is not going to help, a form of cold turkey [is] needed, but no central bank is going to do that,” he added. He warns governments’ debt-to-GDP levels have risen.
The punchline:
“In the long term, it implies rates can never go up, as the damage will be extraordinary in nature,” he said, as they struggle with their debt loads. For now, however, the market which moments ago hit new all time highs, is blissfully ignoring all of the above.
I think its hard to overstate the damage QE has done.
THe bankers would never do this with their own money - buying lousy debt worth pennies on the dollar for $1 on the $1. Bernake has the the financial destruction of the world to answer for - though of course morons will continue to pay the "baffleoon" for speaking engagements.
1. Savers/pensioners around the world are being robbed.
There or no safe income producing investments.
2. pension funds are engaging in risky investments and unable to stay cashflow positive building up enormous liabilities.
3. If capital has no cost then risk has no cost. What banker would lend to a business at zero percent?
"so you want to borrow $100,000 for your business expansion but you'll pay me nothing for my money and there is the chance you won't be able to repay me, is that the proposal?. Gee let me think... uhm, I'll pass."
What absurdity!
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Scenarios with the financial planner 1970:
So you contribute to your retirement savings plan earn a conservative 10% on your money and it builds and grows to produce you a solid retirement income of 70% per year.
Scenarios with the financial planner 2016:
So you contribute to your retirement savings plan earn a conservative 0% to -2% on your money and it doesn't grow you pay taxes on deflated dollars to try an cover your electricity bill and taxes growing at 7-10% per year.
SAN FRANCISCO — Yahoo, already reeling from its September disclosure that 500 million user accounts had been hacked in 2014, disclosed Wednesday that a different attack in 2013 compromised more than 1 billion accounts.
The two attacks are the largest known security breaches of one company’s computer network.
The newly disclosed 2013 attack involved sensitive user information, including names, telephone numbers, dates of birth, encrypted passwords and unencrypted security questions that could be used to reset a password. Yahoo said it is forcing all of the affected users to change their passwords and it is invalidating unencrypted security questions — steps that it declined to take in September.
It is unclear how many Yahoo users were affected by both attacks. The internet company has more than 1 billion active users, but it is not clear how many inactive accounts were hacked.
Yahoo said it discovered the larger hacking after analyzing data files, provided by law enforcement, that an unnamed third party had claimed contained Yahoo information.
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As Jayant detailed previously, https://www.acting-man.com/?p=48062
expect a continuation of new social engineering notifications, each sabotaging wealth-creation, confiscating people’s wealth, and tyrannizing those who refuse to be a part of the herd, in the process destroying the very backbone of the economy and civilization.
There are clear signs that in a very convoluted way, possession of gold for investment purposes will be made illegal. Expect capital controls to follow.
Gold Bullion Is Now Effectively Illegal
Assaults on people’s private property and the integrity of their homes through tax-raids continue. In a recent notification, government has made it clear that any ownership of jewelry above 500 grams of gold per married woman will be put under the microscopic scrutiny of tax authorities.
Steep taxes and penalties will be imposed on those who cannot prove the source of their gold. In India’s Orwellian new-speak this means that because bullion has not been explicitly mentioned, its ownership will be deemed to be illegal. Courts will do what Modi wants. Huge bribes will have to be paid.
Sane people are of course cleaning up their bank lockers. The secondary consequence of this will be a steep increase in unreported crimes, for people will be afraid of going to the police after a theft, fearing that the tax authorities will then ask questions. At the same time, the gold market has mostly gone underground, and apparently the volume of gold buying has gone up.
The salaried middle class is the consumption class, often heavily indebted. Poor people have limited amounts of gold. The government is merely doing what pleases the majority and their sense of envy, to the detriment of small businesses and savers. Now, the middle class is starting to face problems as well. This will worsen once the the impact of the destruction of small businesses becomes obvious.
source: "Gold Is Now Effectively Illegal" In India - The Consequences Of Creating A Cashless Society | Zero Hedge
It inter alia heard a petition and passed a judgment that makes playing the national anthem compulsory at cinema halls before the start of every movie, to promote nationalism. It also decreed that people have to stand up while the anthem is played. Henceforth one can be charged with sedition for not actively showing proper respect to the flag and the anthem.
Only someone very numb can avoid being horrified by this.
By law, the national anthem must henceforth be played in Indian cinemas before the start of a movie (as an aside, the anthem sounds actually interesting from a musical standpoint). Per the court’s order, everyone present must stand up while it is playing, so as to show proper respect. A failure to stand up can lead to an indictment for sedition, and sometimes it leads to offenders being berated and getting beaten up on the spot by irate nationalists. Happily, it is not yet mandatory to shout “Sieg Heil”. [PT]
Salaried middle class Indians — lacking moral instincts and incapable of imagining the concept of individual liberty in this extremely irrational society — are happy with the court’s decision. Insecure in their own skin, they prefer the comfort of the collective. They are the true source of this collectivist poison.
Indian courts are often referred to as “honorable court” and they are very actively taking steps against anyone who shows the slightest of disrespect or challenges their judgments. So any direct challenge to their “authority” would be unwise. Gold Price Skyrockets in India after Currency Ban ? Part V |
