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Builders & Real Estate Bulls Theory Proved Wrong

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Builders & Real Estate Bulls Theory Proved Wrong

Last updated: November 1 2016
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  • Re : Builders & Real Estate Bulls Theory Proved Wrong

    Guaranteeing Toilet paper?

    Originally posted by herohiralal View Post
    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

    Comment


    • Re : Builders & Real Estate Bulls Theory Proved Wrong

      Originally posted by SGanguly View Post
      Gold (physical) and guns are considered good safe havens. Also, buy some canned food while its still available.
      nice joke

      Comment


      • Re : Builders & Real Estate Bulls Theory Proved Wrong

        Originally posted by puser View Post
        nice joke
        Trust me - you'll need it when sh1t hits the fan.

        Comment


        • Re : Builders & Real Estate Bulls Theory Proved Wrong

          Originally posted by wiseman View Post
          Capital Controls has arrived in mainline EU nations ...
          http://globaleconomicanalysis..in/20...overnment.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!!!
          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

          Comment


          • Re : Builders & Real Estate Bulls Theory Proved Wrong

            Originally posted by herohiralal View Post
            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 View Post
            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.

            Comment


            • Re : Builders & Real Estate Bulls Theory Proved Wrong

              Originally posted by wiseman View Post
              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.

              Comment


              • Re : Builders & Real Estate Bulls Theory Proved Wrong

                You keep getting me wrong often ...

                Originally posted by herohiralal View Post
                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.

                At no point did I intend to state that our Govt should guarantee USD. My point was, goaranteeing a note in my hand on its nominal value (Rs100 will be given if you lose your Rs100) is meaningless if the latter Rs 100 buys only half of the earlier Rs100. So, whichever currency you hold your money in, at the end, all currencies are fiat and as most of the economies are showing that the Govts are technically bankrupt, its only a matter of time that these currencies get devalued in REAL terms.

                Second, we are falling into the trap of conventional times in believing that a Promissory Note from a failed Debtor is as good as money. This has become common practice with countries like the US setting aside sound accounting practices (FASB 157 Mark-to-Market switched to Mark-to-fantasy). We are assuming that the money owed to us by the IMF is still with the IMF. Nope. It will very soon disappear into the black hole called Europe (from where it will be stolen legally by Private Banks) and one of these days it will get monetised away (by devalued currency) or simply reneged upon (like Greece and many others will shortly do) because there is no money to pay it back in the foreseeable future. Its already been stolen, you see? To give readers an example, the 130 Billion bailout of Greece will see not a SINGLE dollar actually reach Greek shores. It will go into escrow and will pay back Greek debt already taken earlier!! SERIOUSLY! Not a single dollar wihh reach the Greeks. And they criticize Indian trickle-down system where only 15% reaches the targeted recipient. In their case its ZERO%!

                As I said, a Mark-to-Fantasy accounting entry of my money supposedly going to be paid back at an indeterminate time by a bankrupt country at a real value possibly far less than the one I put up ... is a Good Debt?

                Well, in that case, can I borrow lots of such money from you and give you a (nicely designed) Promissory Note for repayment as an when capable at a value which may be anything at that point (probably fr less)?

                And I'm not getting carried away when I see my money getting devalued DAILY by my Government, which, as opposed to Guaranteeing my REAL money (value) is instead guaranteeing the REAL decline of value in my hands every day by its inept practices! Why do you think people are rushing to buy REAL assets at ever-spiraling prices? They are not stupid. This is the only way they see their REAL value retained.

                Would you stay calm when your money is being destroyed at 15-20% (or more) per annum? By a Govt which claims to guarantee it?!

                cheers
                Last edited by wiseman; June 25 2012, 03:15 PM.

                Comment


                • Re : Builders & Real Estate Bulls Theory Proved Wrong

                  Originally posted by puser View Post
                  dear, the link doesnt work. please correct the url
                  Thanks. How about now?

                  globaleconomicanalysis..in/2012/06/capital-controls-hit-spain-government.html

                  Somehow IREF swallows up the word "b.logspot". The site is globaleconomicanalysis.b.logspot.in and b.logspot is swallowed up. Annoying!

                  In each case remove the "." in "b.logspot" and you should be fine!

                  Otherwise go to MISHs (Mike Shedlock) b.log and check out this article on the left panel.

                  cheers
                  Last edited by wiseman; June 25 2012, 03:25 PM.

                  Comment


                  • Re : Builders & Real Estate Bulls Theory Proved Wrong

                    Originally posted by wiseman View Post
                    At no point did I intend to state that our Govt should guarantee USD. My point was, goaranteeing a note in my hand on its nominal value (Rs100 will be given if you lose your Rs100) is meaningless if the latter Rs 100 buys only half of the earlier Rs100. So, whichever currency you hold your money in, at the end, all currencies are fiat and as most of the economies are showing that the Govts are technically bankrupt, its only a matter of time that these currencies get devalued in REAL terms.

                    Second, we are falling into the trap of conventional times in believing that a Promissory Note from a failed Debtor is as good as money. This has become common practice with countries like the US setting aside sound accounting practices (FASB 157 Mark-to-Market switched to Mark-to-fantasy). We are assuming that the money owed to us by the IMF is still with the IMF. Nope. It will very soon disappear into the black hole called Europe (from where it will be stolen legally by Private Banks) and one of these days it will get monetised away (by devalued currency) or simply reneged upon (like Greece and many others will shortly do) because there is no money to pay it back in the foreseeable future. Its already been stolen, you see? To give readers an example, the 130 Billion bailout of Greece will see not a SINGLE dollar actually reach Greek shores. It will go into escrow and will pay back Greek debt already taken earlier!! SERIOUSLY! Not a single dollar wihh reach the Greeks. And they criticize Indian trickle-down system where only 15% reaches the targeted recipient. In their case its ZERO%!

                    As I said, a Mark-to-Fantasy accounting entry of my money supposedly going to be paid back at an indeterminate time by a bankrupt country at a real value possibly far less than the one I put up ... is a Good Debt?

                    Well, in that case, can I borrow lots of such money from you and give you a (nicely designed) Promissory Note for repayment as an when capable at a value which may be anything at that point (probably fr less)?

                    And I'm not getting carried away when I see my money getting devalued DAILY by my Government, which, as opposed to Guaranteeing my REAL money (value) is instead guaranteeing the REAL decline of value in my hands every day by its inept practices! Why do you think people are rushing to buy REAL assets at ever-spiraling prices? They are not stupid. This is the only way they see their REAL value retained.

                    Would you stay calm when your money is being destroyed at 15-20% (or more) per annum? By a Govt which claims to guarantee it?!

                    cheers
                    If you think the money kept in bank is lossing its value then you should invest it somewhere else and not keep it in a bank (I dont keep a lot of money in banks . I have already suggested that keeping money in FD is a lossing proposition and over the last 3 yrs investing in RE has been more profitable. What you and I need to do with out excess cash over the next 3-5-10 years is the next question. But that dosent make the investment by India in IMF bonds any risker than buying US govt bonds.

                    The Money owned by IMF to India is in terms of bonds so India could easily sell it to any other country if India ever needed the money.

                    The only thing certain with fiat money is that inflation is constant. I understand the -ve aspects with fiat money but there isnt another method which will work in its place (gold standard does not work cause it based on a commodity and again if a person invents a way to harness all the gold present in the ocean where would that leave us? just like how the central banks have found out a way to sav govts by printing new money)

                    Comment


                    • Re : Builders & Real Estate Bulls Theory Proved Wrong

                      [QUOTE=compuwalah;464337]:-D sky is falling scenario. You can find many such examples of "sky falling" in this forum.

                      [QUOTE]


                      Yes if one stays put on ones beliefs long enough then they will evenually come true. But does that mean one should just ignore the data and put his/her beliefs over hard data? India will suffer from the current bubble that is getting built up in the RE market but is it happening today with high interest rates, decent growth, best demographic profile in the world, etc.

                      There are many options available with people, govt and companies to prevent a massive fall in RE prices and we havent even used those options so its really really difficult to see a massive fall in prices without a complete stop in any policy changes from govt.

                      Remember the interest rates are still very high, govt still owns a lot of companies and so productivity gains by privaitsing those companies and reducing the debt by selling them is still open then we have FDI in retail, professional service and opening up of the education sector and removing APMC, privatising railways, privatising water and power distribution, etc

                      I am not even talking about social issues which the govt could resolve like reservation or law and order.

                      So it wont be a one way downhill for RE prices from here unless the govt just stops responding.

                      Comment

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