Hereby I will prove how the realty boomers arguments are false.

What are the boomers arguments?

1.) Buy today, houses always increase in value in the long run.
WRONG. House prices cannot increase more than incomes in the long run. This is obvious if you think about it. If house prices go up more than people can afford to pay, buying stops, like it has stopped now.
Even Warren Buffett have pointed out that houses don't increase in intrinsic value. Unless there's a bubble or a crash, house prices simply reflect current salaries and interest rates. If a house is 100 years old, it's value in sheltering you is exactly the same as it was 100 years ago. Then came the maintenance as the house didn't renovate itself. It also has taxes, and insurance - costs that always increase and never go away. The price of the house went up about as much as salaries went up.
To put this is simple perspective, vegetable were costing Rs.5-6/kg when 5 digit salary was a rarity.
Today, the prices have gone up by about 4 times but so have the salaries. So, sounds very much like the reasoning people use now when they talk about how much their father's house appreciated "in the long run" without considering that salaries rose a proportional amount.

2.) Renting is just wastage of money.
WRONG. As said before renting is now much cheaper per month than owning. If you don't rent, you either:

* Have a mortgage, in which case you are throwing away money on interest, tax, insurance, maintenance, costs that increase forever.
* Own outright, in which case you are throwing away the extra income you could get by converting your house to cash, investing in bonds, and renting a similar place to live for much less money. This extra income is sufficient for emergency expenses,retirement etc.

Either way, owners lose much more money every month than renters and that's assuming prices don't correct to very high level & everything is smooth in the economy.

3.) As a renter, you won't have any money left as you will spend them on vacations,cars & hence won't have equity/savings etc.
WRONG. Equity is just money. Renters are actually in a better position to build equity/savings through investing in anything but housing. Renters can get rich much faster than owners, just by investing in conservative stocks & bonds.

* Owners are losing every month by paying much more for interest than they would pay for rent. The tax deduction does not come close to making owing competitive with renting.
* Owners must pay taxes simply to own a house. That is not true of stocks, bonds, or any other asset that can build equity/savings. Only houses are such a guaranteed drain on cash.
* Owners must insure a house, but not most other investments.
* Owners must pay to repair a house, but not a stock or a bond.
* Owners lose their money as house prices reduce. The EMI's remain constant in spite of reduction in rates. At the end of loan tenure, they would have paid almost twice than that of current renters who will buy at logical rates. Keep interest rates in mind. Most of the EMI is not principal amount but interest.

4.) There are great tax advantages to owning a house.
WRONG. Many people believe you can just reduce your income tax by the amount you pay in interest, but they are wrong. Buyers may not deduct interest from income tax; they deduct interest from taxable income. And even then, the tax advantage is not significant compared to the large monthly loss from owning.

If you don't own a house but want to live in one, your choice is to rent a house or rent money to buy a house. To rent money is to take out a loan. A mortgage is a money-rental agreement. House renters take no risk at all, but money-renting owners take on the huge risk of falling house prices, as well as all the costs of repairs, insurance, property taxes, etc.

5.) RE is based on local factors, it's not a national phenomenon. RE of Delhi-NCR,Bangalore & rest of the cities has nothing to do with Pune RE.
WRONG. Lending rates remain the same throughout the country. ALL loans are harder to get. This will drive prices down everywhere.

6.) A rental house provides good income. So, you can rent if you have purchased as investment.
WRONG. Rental houses provide very poor income in hyped areas and certainly cannot cover mortgage payments. Remember there is almost 300% difference between EMIs & rent for the same house.

It's pointless to do the work of being a landlord if you can make more money with no risk, no work, and no state income tax by investing in assured good returns bond.

7.) If owning is a loss in monthly cash flow, but appreciation will make up for it.
WRONG. Appreciation is negative. Prices are going down. It only adds to the injury of already high EMI's.

8.) As soon as prices drop a little, the number of buyers on the sidelines willing to jump back in increases.
WRONG. There are very few buyers left, and those who do want to buy will be limited by increasing difficulty of borrowing now that many house owners are near bankrupt as they don't save anything at the end of the month due to high EMI's.
No one has to buy, but there will be more and more people who have no choice but to sell as their payments rise. That will keep driving prices downward for a long time.

9.) House prices never fall atleast in Pune.
WRONG. If you see the RE scenario of 1996, prices crashed by 50% & took a whole 7+ years to recover.
Exact 1996 scenario may not be there today but strong correction is inevitable across the city.

10.) House prices don't fall to zero like stock prices, so it's safer to invest in real estate.
WRONG. House prices won't be zero, but the equity or the principal amount you paid can be zero or even negative. What you will pay as EMIs later in actual terms is not for the principal amount but only the interest as house prices dip. So, you will be only serving the bank.

11.) Prices will soften gradually, won't crash immediately.
WRONG. Prices are falling off a cliff. No one knows exactly what will happen, but it looks like prices will continue to fall for long time. These are just more manipulation of buyer emotions, to get them to buy even while prices are falling.

12.) The bubble prices were driven by supply and demand alone.
WRONG. Prices were driven by low interest rates and risky loans & good returns for investors in initial phases of boom in 2004-05.
Prices went up, interest rates went up & buyers savings went down. So prices are violating the most basic assumptions about supply and demand.

13.) There is lack of land.
WRONG. Ample of land is available & continue to be even in future in Pune. Sales volume are down. Even in Japan (small country with less land), prices went down. Current prices here are the same as that of 23 years ago. If we really had a housing shortage, there would not be so many vacant rentals.

14.) If you don't own, you'll live in a cheap neighborhood later.
WRONG. For the any given monthly payment, you can rent a much better house than you can buy. Renters live better, not worse. There are downsides to renting, such as being told to move at the end of your lease, or having your rent raised, but since there are thousands of vacant rentals, you can take your pick and be quite happy renting during the crash. There are similar but worse problems for owners anyway, such as being fired and losing your house, or having your interest rate and property taxes adjust upward. Remember, property taxes are forever.

15.) There's always someone predicting a real estate crash.
TRUE, yet irrelevant. There are very real crashes every decade or so. Even a broken clock is right twice a day.

16.) Local incomes justify the high prices.
WRONG. The mortgage should be more than your 3 years earning. It is much higher today. Most are already in danger/red zone.

17.) You have to live somewhere.
CORRECT. But that doesn't mean you should waste your life savings on a bad investment. You can live in a better house for much less money by renting during the down slide in RE.

18.) It's not a house, it's a home.
WRONG. Wherever one lives in it is home, be it apartment, condo, bungalow , mansion or house. Calling a house a "home" is a manipulation of your emotions for profit.

19.) If you don't buy now, you'll never get another chance.
WRONG. History proves otherwise.
Here's a beautiful quote from a analyst:-
"The real issue isn't whether you will be stuck being a renter all your life, she says. Its whether you'll get so scared about being shut out that you'll buy at the market's peak and be stuck in a property you can't afford or sell."

20.) It would take major economic recession or a major earthquake that wipes out this area in order for the price to fall by over 50%.
WRONG. Even today, if the prices fall by 50%, there will still be very few people who can buy at this levels due to uncertainty in jobs & most importantly high EMIs. Also, look at the rental rates for equivalent houses. Which loss per month is larger? EMI or rent?

contd....
Read more
Reply
12597 Replies
Sort by :Filter by :
  • Originally Posted by realacres
    Ratings agency Moody's downgraded 15 of the world's biggest banks on Thursday, lowering credit ratings by one to three notches to reflect the risk of losses they face from volatile capital markets activities

    Moody's cuts ratings of 15 banks, Morgan Stanley down 2 notches

    >> Does this remind of 2008 ?


    2008 was a sudden change to most of the banks and investors. This rating downgrade is an acknowledgement by the rating agency that making money for Investment banks is going to be difficult for sometime cause the German banks, sovereign wealth funds and other wealthy investors don't trust the rating of bonds and so selling crap marked as AAA is no possible. Plus trading volumn on markets is quite low brokerage business is no longer as lucrative as before. Add to that the policy uncertainty in US and Europe.

    The downgrade was a little late like the -ve outlook for India.
    CommentQuote
  • India's $10 billion (Rs. 56000 crores) for EU bailout fund

    ON BOARD PM'S SPECIAL AIRCRAFT: Rejecting the Opposition criticism, Prime Minister Manmohan Singh today said he did not see anything wrong in India's $10 billion (Rs 56,000 crore) contribution to the IMF for its $430 billion bailout fund created to assist the debt-wracked Eurozone tackle its financial crisis.

    Defending the Government's decision, the prime minister said the contribution will be used up only if the need arose and asserted it will continue to be part of the country's reserves.

    "I don't think there is anything wrong in our contributing to IMF. The contribution will be used only if needed and it will also continue to be part of India's reserves," Singh told reporters accompanying him on his return home from a eight-day foreign tour.

    Prime Minister Singh came under attack at home after he announced at the Summit of the Grouping of 20 developed and developing countries (G-20) in Mexico early this week that India will contribute $10 billion to IMF's firewall of additional $430 billion to help the Eurozone.

    The argument put forth by the critics was that India can ill afford to pledge such a huge amount when the country itself is facing an economic slowdown.

    Singh said that before making the announcement he had a discussion among the BRICS leaders and all of them announced similar contributions.

    BRICS comprises India, China, Brazil, Russia and South Africa. The five-nation bloc as a whole had decided at the G-20 Summit to contribute $75 billion to shore up IMF's finances to help tackle the Eurozone crisis.

    "As a responsible member of the international community it was our bounden duty also to make our contribution," he said.

    Singh said India would like the IMF to play an important role in resolving various difficulties that are on the horizon in the international economy and financial system.

    A day after the prime minister made the announcement, Indian officials at the G20 Summit said India may not be called upon to draw out the amount if there is an improvement in the world situation and concrete steps taken to defuse the crisis in the 17-nation Eurozone.
    CommentQuote
  • Originally Posted by realacres
    Ratings agency Moody's downgraded 15 of the world's biggest banks on Thursday, lowering credit ratings by one to three notches to reflect the risk of losses they face from volatile capital markets activities

    Moody's cuts ratings of 15 banks, Morgan Stanley down 2 notches

    >> Does this remind of 2008 ?


    What is not being reported in the MSM is that bank runs are getting quite severe in Europe. People are withdrawing billions each day -- not just from PIIGS, but in UK, Ireland, and even Germany.

    Since mid-last week, Royal Bank of Scotland has locked out millions of its clients, and even its own employees, from their accounts. ATMs are not working, balances have disappeared, payments from elsewhere have not been credited, accounts with positive balances are being shown overdrawn. Massive confusion. Just google and read the plight of thousands of RBS clients.

    Just 2 weeks ago, the same thing happened at BNI People simply got locked out of their accounts. The Greek govt is appropriating its citizen's funds in bank a/cs and term deposits on any pretext. This means that the govt and banks are pre-emptively striking out at the populace by shutting down access to people's own funds. Its a perverse method of avoiding bank runs.

    Excessive debt is causing the govts and banks to cannibalise their own citizens. And in India, people are still not understanding the grave implications of the situation of the global economy. They are too complacent. India is in as much bad shape as the PIIGS. People simply got locked out of their accounts. The Greek govt is appropriating its citizen's funds in bank a/cs and term deposits on any pretext. This means that the govt and banks are pre-emptively striking out at the populace by shutting down access to people's own funds. Its a perverse method of avoiding bank runs.

    Excessive debt is causing the govts and banks to cannibalise their own citizens. And in India, people are still not understanding the grave implications of the situation of the global economy. They are too complacent. India is in as much bad shape as the PIIGS. People simply got locked out of their accounts. The Greek govt is appropriating its citizen's funds in bank a/cs and term deposits on any pretext. This means that the govt and banks are pre-emptively striking out at the populace by shutting down access to people's own funds. Its a perverse method of avoiding bank runs.

    Excessive debt is causing the govts and banks to cannibalise their own citizens. And in India, people are still not understanding the grave implications of the situation of the global economy. They are too complacent. India is in as much bad shape as the PIIGS.
    CommentQuote
  • Originally Posted by SanjanaSingh
    What is not being reported in the MSM is that bank runs are getting quite severe in Europe. People are withdrawing billions each day -- not just from PIIGS, but in UK, Ireland, and even Germany.

    Since mid-last week, Royal Bank of Scotland has locked out millions of its clients, and even its own employees, from their accounts. ATMs are not working, balances have disappeared, payments from elsewhere have not been credited, accounts with positive balances are being shown overdrawn. Massive confusion. Just google and read the plight of thousands of RBS clients.

    Just 2 weeks ago, the same thing happened at BNI People simply got locked out of their accounts. The Greek govt is appropriating its citizen's funds in bank a/cs and term deposits on any pretext. This means that the govt and banks are pre-emptively striking out at the populace by shutting down access to people's own funds. Its a perverse method of avoiding bank runs.

    Excessive debt is causing the govts and banks to cannibalise their own citizens. And in India, people are still not understanding the grave implications of the situation of the global economy. They are too complacent. India is in as much bad shape as the PIIGS.

    that's harrowing! i hope in India that doesn't happen. where one should keep their money when its not safe in hands of banks as well?

    that's harrowing! i hope in India that doesn't happen. where one should keep their money when its not safe in hands of banks as well?

    that's harrowing! i hope in India that doesn't happen. where one should keep their money when its not safe in hands of banks as well?

    that's harrowing! i hope in India that doesn't happen. where one should keep their money when its not safe in hands of banks as well?

    that's harrowing! i hope in India that doesn't happen. where one should keep their money when its not safe in hands of banks as well?
    CommentQuote
  • MMS has now turned into full-time politician!

    Originally Posted by mangopeople
    ON BOARD PM'S SPECIAL AIRCRAFT: Rejecting the Opposition criticism, Prime Minister Manmohan Singh today said he did not see anything wrong in India's $10 billion (Rs 56,000 crore) contribution to the IMF for its $430 billion bailout fund created to assist the debt-wracked Eurozone tackle its financial crisis.

    Defending the Government's decision, the prime minister said the contribution will be used up only if the need arose and asserted it will continue to be part of the country's reserves.

    "I don't think there is anything wrong in our contributing to IMF. The contribution will be used only if needed and it will also continue to be part of India's reserves," Singh told reporters accompanying him on his return home from a eight-day foreign tour.

    Prime Minister Singh came under attack at home after he announced at the Summit of the Grouping of 20 developed and developing countries (G-20) in Mexico early this week that India will contribute $10 billion to IMF's firewall of additional $430 billion to help the Eurozone.

    The argument put forth by the critics was that India can ill afford to pledge such a huge amount when the country itself is facing an economic slowdown.

    Singh said that before making the announcement he had a discussion among the BRICS leaders and all of them announced similar contributions.

    BRICS comprises India, China, Brazil, Russia and South Africa. The five-nation bloc as a whole had decided at the G-20 Summit to contribute $75 billion to shore up IMF's finances to help tackle the Eurozone crisis.

    "As a responsible member of the international community it was our bounden duty also to make our contribution," he said.

    Singh said India would like the IMF to play an important role in resolving various difficulties that are on the horizon in the international economy and financial system.

    A day after the prime minister made the announcement, Indian officials at the G20 Summit said India may not be called upon to draw out the amount if there is an improvement in the world situation and concrete steps taken to defuse the crisis in the 17-nation Eurozone.



    The EU is so desperate that they pulled out all stops to beg crumbs ($10 Billion is crumbs in the face of Euro 2-3 Trillion, which is seen as the real current cost of the EU problem) from Developing countries.

    This money is NOT going to these countries. This is going to the Private Banks which took risks to make huge profits and now that they are seeing those risks coming home, they are dumping the consequences onto ax payers.

    India's tax money is now going to repair the losses of Private European and American banksters!!! This ALONE calls for MMS's resignation. Does the Congress have no shame left at all any more?

    High hopes that this money will only be called for when needed. Given what Sanjana said, these very same risky banks are seeing Billions of their Capital going out the backdoor. Given a 30-40 times leverage on this capital being lent out to now-risky loans which will see as much as 100% haircuts, they need the paltry $90 Billion put up by the BRICS YESTERDAY!

    The REAL reason for this Indian bailout of European and American banksters is because of severe political pressure by the developed countries on developing nations that, unless we stem the leak from this HUGE HOLE, the entire system will collapse and that impact on all of us will be orders of magnitude larger. So, throw the money down the bottomless pit (of bad debts) in he hope that the stink will somehow subside and fragrance will emanate from it.

    He also did it to follow the idiotic example of all other BRICS nations and to not look like the only sane person in the summit!!!

    This now indicates that the last troops have been committed to the battle and soon, once they are defeated, globally we will face financial rout!

    cheers
    CommentQuote
  • Originally Posted by SanjanaSingh
    What is not being reported in the MSM is that bank runs are getting quite severe in Europe. People are withdrawing billions each day -- not just from PIIGS, but in UK, Ireland, and even Germany.

    Since mid-last week, Royal Bank of Scotland has locked out millions of its clients, and even its own employees, from their accounts. ATMs are not working, balances have disappeared, payments from elsewhere have not been credited, accounts with positive balances are being shown overdrawn. Massive confusion. Just google and read the plight of thousands of RBS clients.

    Just 2 weeks ago, the same thing happened at BNI People simply got locked out of their accounts. The Greek govt is appropriating its citizen's funds in bank a/cs and term deposits on any pretext. This means that the govt and banks are pre-emptively striking out at the populace by shutting down access to people's own funds. Its a perverse method of avoiding bank runs.

    Excessive debt is causing the govts and banks to cannibalise their own citizens. And in India, people are still not understanding the grave implications of the situation of the global economy. They are too complacent. India is in as much bad shape as the PIIGS.

    A Bank run is not taking place in UK! Pls verify facts before spreading rumors. Its a IT glitch which is causing problems at RBS and Natwest. The UK govt has a major stake in both banks. UK is considered a safe places for investors to put their money - look at the gilt yields and the prices of real estate in London. The same is true with Germany. People from Italy, Spain, Greece and Portugal are perfroming a bank jog and not a run. A run dosent last for months. But yes Spain, Greece, Italy and Portugal are seeing people withdraw money and put it in safer German and French banks.

    When there was a run on a UK bank in 2008 the UK govt had gauranteed all deposits in the UK banks so there is no need to worry. A bank run in India (if it at all happens) will result in the same policy.

    A Bank run is not taking place in UK! Pls verify facts before spreading rumors. Its a IT glitch which is causing problems at RBS and Natwest. The UK govt has a major stake in both banks. UK is considered a safe places for investors to put their money - look at the gilt yields and the prices of real estate in London. The same is true with Germany. People from Italy, Spain, Greece and Portugal are perfroming a bank jog and not a run. A run dosent last for months. But yes Spain, Greece, Italy and Portugal are seeing people withdraw money and put it in safer German and French banks.

    When there was a run on a UK bank in 2008 the UK govt had gauranteed all deposits in the UK banks so there is no need to worry. A bank run in India (if it at all happens) will result in the same policy.

    A Bank run is not taking place in UK! Pls verify facts before spreading rumors. Its a IT glitch which is causing problems at RBS and Natwest. The UK govt has a major stake in both banks. UK is considered a safe places for investors to put their money - look at the gilt yields and the prices of real estate in London. The same is true with Germany. People from Italy, Spain, Greece and Portugal are perfroming a bank jog and not a run. A run dosent last for months. But yes Spain, Greece, Italy and Portugal are seeing people withdraw money and put it in safer German and French banks.

    When there was a run on a UK bank in 2008 the UK govt had gauranteed all deposits in the UK banks so there is no need to worry. A bank run in India (if it at all happens) will result in the same policy.

    A Bank run is not taking place in UK! Pls verify facts before spreading rumors. Its a IT glitch which is causing problems at RBS and Natwest. The UK govt has a major stake in both banks. UK is considered a safe places for investors to put their money - look at the gilt yields and the prices of real estate in London. The same is true with Germany. People from Italy, Spain, Greece and Portugal are perfroming a bank jog and not a run. A run dosent last for months. But yes Spain, Greece, Italy and Portugal are seeing people withdraw money and put it in safer German and French banks.

    When there was a run on a UK bank in 2008 the UK govt had gauranteed all deposits in the UK banks so there is no need to worry. A bank run in India (if it at all happens) will result in the same policy.

    A Bank run is not taking place in UK! Pls verify facts before spreading rumors. Its a IT glitch which is causing problems at RBS and Natwest. The UK govt has a major stake in both banks. UK is considered a safe places for investors to put their money - look at the gilt yields and the prices of real estate in London. The same is true with Germany. People from Italy, Spain, Greece and Portugal are perfroming a bank jog and not a run. A run dosent last for months. But yes Spain, Greece, Italy and Portugal are seeing people withdraw money and put it in safer German and French banks.

    When there was a run on a UK bank in 2008 the UK govt had gauranteed all deposits in the UK banks so there is no need to worry. A bank run in India (if it at all happens) will result in the same policy.
    CommentQuote
  • Originally Posted by puser
    that's harrowing! i hope in India that doesn't happen. where one should keep their money when its not safe in hands of banks as well?


    Gold (physical) and guns are considered good safe havens. Also, buy some canned food while its still available.
    CommentQuote
  • Capital Controls and Border Controls already operational in Europe

    Originally Posted by SanjanaSingh
    What is not being reported in the MSM is that bank runs are getting quite severe in Europe. People are withdrawing billions each day -- not just from PIIGS, but in UK, Ireland, and even Germany.

    Since mid-last week, Royal Bank of Scotland has locked out millions of its clients, and even its own employees, from their accounts. ATMs are not working, balances have disappeared, payments from elsewhere have not been credited, accounts with positive balances are being shown overdrawn. Massive confusion. Just google and read the plight of thousands of RBS clients.

    Just 2 weeks ago, the same thing happened at BNI People simply got locked out of their accounts. The Greek govt is appropriating its citizen's funds in bank a/cs and term deposits on any pretext. This means that the govt and banks are pre-emptively striking out at the populace by shutting down access to people's own funds. Its a perverse method of avoiding bank runs.

    Excessive debt is causing the govts and banks to cannibalise their own citizens. And in India, people are still not understanding the grave implications of the situation of the global economy. They are too complacent. India is in as much bad shape as the PIIGS.


    Capital Controls has arrived in mainline EU nations ...
    http://globaleconomicanalysis..in/2012/06/capital-controls-hit-spain-government.html

    Things are going to unravel much quicker now and it will only be months from now to serious risk of collapse in domino fashion.

    There will be another QE due to the desperate situation. As already known, most people think it will fail ... and so it will!

    Paper is being drawn out of banks so as to at least have it in own hands. But with paper (as we know from the past) when its real value shows up (through devaluation) how does it matter whether its in the bank or in your hands?

    Recollect the story of the man who had 2 cups of coffee in Germany in 1923 for 5000 Marks. He finally got a bill of 14000 Marks. When he asked how that could be, he was told that he ordered the second cup of coffee later and at that time the price had gone up from 5000 to 9000!!!:bab (59):
    I'm now going to step up puchase of physical PMs as the signals are quite clear!

    cheers

    Things are going to unravel much quicker now and it will only be months from now to serious risk of collapse in domino fashion.

    There will be another QE due to the desperate situation. As already known, most people think it will fail ... and so it will!

    Paper is being drawn out of banks so as to at least have it in own hands. But with paper (as we know from the past) when its real value shows up (through devaluation) how does it matter whether its in the bank or in your hands?

    Recollect the story of the man who had 2 cups of coffee in Germany in 1923 for 5000 Marks. He finally got a bill of 14000 Marks. When he asked how that could be, he was told that he ordered the second cup of coffee later and at that time the price had gone up from 5000 to 9000!!!:bab (59):
    I'm now going to step up puchase of physical PMs as the signals are quite clear!

    cheers

    Things are going to unravel much quicker now and it will only be months from now to serious risk of collapse in domino fashion.

    There will be another QE due to the desperate situation. As already known, most people think it will fail ... and so it will!

    Paper is being drawn out of banks so as to at least have it in own hands. But with paper (as we know from the past) when its real value shows up (through devaluation) how does it matter whether its in the bank or in your hands?

    Recollect the story of the man who had 2 cups of coffee in Germany in 1923 for 5000 Marks. He finally got a bill of 14000 Marks. When he asked how that could be, he was told that he ordered the second cup of coffee later and at that time the price had gone up from 5000 to 9000!!!:bab (59):
    I'm now going to step up puchase of physical PMs as the signals are quite clear!

    cheers

    Things are going to unravel much quicker now and it will only be months from now to serious risk of collapse in domino fashion.

    There will be another QE due to the desperate situation. As already known, most people think it will fail ... and so it will!

    Paper is being drawn out of banks so as to at least have it in own hands. But with paper (as we know from the past) when its real value shows up (through devaluation) how does it matter whether its in the bank or in your hands?

    Recollect the story of the man who had 2 cups of coffee in Germany in 1923 for 5000 Marks. He finally got a bill of 14000 Marks. When he asked how that could be, he was told that he ordered the second cup of coffee later and at that time the price had gone up from 5000 to 9000!!!:bab (59):
    I'm now going to step up puchase of physical PMs as the signals are quite clear!

    cheers

    Things are going to unravel much quicker now and it will only be months from now to serious risk of collapse in domino fashion.

    There will be another QE due to the desperate situation. As already known, most people think it will fail ... and so it will!

    Paper is being drawn out of banks so as to at least have it in own hands. But with paper (as we know from the past) when its real value shows up (through devaluation) how does it matter whether its in the bank or in your hands?

    Recollect the story of the man who had 2 cups of coffee in Germany in 1923 for 5000 Marks. He finally got a bill of 14000 Marks. When he asked how that could be, he was told that he ordered the second cup of coffee later and at that time the price had gone up from 5000 to 9000!!!:bab (59):
    I'm now going to step up puchase of physical PMs as the signals are quite clear!

    cheers
    CommentQuote
  • Originally Posted by wiseman
    Capital Controls has arrived in mainline EU nations
    I'm now going to step up puchase of physical PMs as the signals are quite clear!

    cheers


    Yeah, me too.
    CommentQuote
  • Guaranteeing Toilet paper?

    Originally Posted by herohiralal
    A Bank run is not taking place in UK! Pls verify facts before spreading rumors. Its a IT glitch which is causing problems at RBS and Natwest. The UK govt has a major stake in both banks. UK is considered a safe places for investors to put their money - look at the gilt yields and the prices of real estate in London. The same is true with Germany. People from Italy, Spain, Greece and Portugal are perfroming a bank jog and not a run. A run dosent last for months. But yes Spain, Greece, Italy and Portugal are seeing people withdraw money and put it in safer German and French banks.

    When there was a run on a UK bank in 2008 the UK govt had gauranteed all deposits in the UK banks so there is no need to worry. A bank run in India (if it at all happens) will result in the same policy.



    Gove guarantees are nothing if value crashes. In whatever form, toilet paper is toilet paper only! :(

    We have seen a 25% decline in relative value against another variety of toilet paper (USD). Will Govt guarantee the original value of my rupee?! Now that MMS has thrown 10 Billion away, current deficit will increase (no matter that the accountant will say that its still against our name in the books; its not available in our hands). This will only make value of toilet paper go down marginally faster!!!

    That, only PM and REAL assets can guarantee. When ultimate crisis hits, even other REAL assets will have a hard time dfending your value. PMs will probably be the last one standing! My opinion and I suspect most others will not agree TOGAY! :)

    Time will tell ...

    cheers
    CommentQuote
  • Originally Posted by SGanguly
    Gold (physical) and guns are considered good safe havens. Also, buy some canned food while its still available.


    :D:D nice joke
    CommentQuote
  • Originally Posted by puser
    :D:D nice joke


    Trust me - you'll need it when sh1t hits the fan.
    CommentQuote
  • Originally Posted by wiseman
    Capital Controls has arrived in mainline EU nations ...
    http://globaleconomicanalysis..in/2012/06/capital-controls-hit-spain-government.html

    Things are going to unravel much quicker now and it will only be months from now to serious risk of collapse in domino fashion.

    There will be another QE due to the desperate situation. As already known, most people think it will fail ... and so it will!

    Paper is being drawn out of banks so as to at least have it in own hands. But with paper (as we know from the past) when its real value shows up (through devaluation) how does it matter whether its in the bank or in your hands?

    Recollect the story of the man who had 2 cups of coffee in Germany in 1923 for 5000 Marks. He finally got a bill of 14000 Marks. When he asked how that could be, he was told that he ordered the second cup of coffee later and at that time the price had gone up from 5000 to 9000!!!:bab (59):
    I'm now going to step up puchase of physical PMs as the signals are quite clear!

    cheers


    dear, the link doesnt work. please correct the url
    CommentQuote
  • Originally Posted by herohiralal
    A Bank run is not taking place in UK! Pls verify facts before spreading rumors. Its a IT glitch which is causing problems at RBS and Natwest. .
    .

    :-D sky is falling scenario. You can find many such examples of "sky falling" in this forum.

    Originally Posted by herohiralal

    When there was a run on a UK bank in 2008 the UK govt had gauranteed all deposits in the UK banks so there is no need to worry. A bank run in India (if it at all happens) will result in the same policy.


    well said hero. Every govt will try hard to maintain the trust on nationalized banks.
    CommentQuote
  • Originally Posted by wiseman
    Gove guarantees are nothing if value crashes. In whatever form, toilet paper is toilet paper only! :(

    We have seen a 25% decline in relative value against another variety of toilet paper (USD). Will Govt guarantee the original value of my rupee?! Now that MMS has thrown 10 Billion away, current deficit will increase (no matter that the accountant will say that its still against our name in the books; its not available in our hands). This will only make value of toilet paper go down marginally faster!!!

    That, only PM and REAL assets can guarantee. When ultimate crisis hits, even other REAL assets will have a hard time dfending your value. PMs will probably be the last one standing! My opinion and I suspect most others will not agree TOGAY! :)

    Time will tell ...

    cheers


    if you wanted to keep your money in USD then you should have done it. RBI allows around 200K to be taken out of the country per year I think. Govt can only gaurantee its currency kept in its banks (private and public) not some other currency kept it its banks. Indian govt can print indian rupee but not the USD so how can it gaurantee that?

    IMF contribution will not add to the current account deficit. It works something like this. The dollars that RBI has in its reserves (something like 250 odd billion $) are usually invested in safe bonds issued by foreign govt (US fed bonds, UK gilt etc). I think India has around 40-50 billion $ invested in US fed bonds. Now the Indian govt via the RBI will take 10 billion $ out of that reserve and buy 10 billion bonds that are issued by the IMF. So money from one investment will move into another investment. Bonds issued by the IMF are super safe and give decent interest rates so it will be much better than keeping money in US bonds which are yielding very low returns.

    Yes the world may come to an end and all money maybe be worthless but lets keep things in context and have a sence of proportion. India is buying 10 billion $ of IMF bonds. If you think the IMF will fail then you are assuming that US, UK, Japan, Germany, China, Canada and Australia have failed!! In which case we have a total collapse.
    CommentQuote