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Is it Over - Bubble burst by liquidity Crisis

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Is it Over - Bubble burst by liquidity Crisis

Last updated: June 24 2012
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  • Is it Over - Bubble burst by liquidity Crisis

    India's growth was fueled by the abundant global cash liquidity.

    A corporate bank could borrow for 2% in Japan and invest in India's Debt market for 7% - 8%.Profit for nothing - Untill recently.

    Any Indian PE firm,Venture capitalist or large builder could walk in to global market with a project and money was thrown at them.

    Now the global cash flow has come to a grinding halt.

    Banks are not lending (Short term reserve) to another bank fearing the Bank would collapse.

    25 global banks have collapsed in 10 days (US,Europe and Asia).

    1 European country is Bankarupt (Iceland)

    18 major countries have entered recession (Includeing US,UK,Australia,Germany,Japan,NZ,South Korea etc)

    Leaman Brothers was 168 years old,It had survived the great Depression in 1930's but dead now.

    India Real estate will starve for cash.
    Builders will not buy new lands for future projects.
    Builders will sell most of their land bank for liquid cash.

    I am an Economist - I havent seen (Or heard) of fall currency and Index this fast.

    This is worst than 1930's Great depression.

    The fuel (Liquidity and cash flow) for the Real estate fire is over.

    Bank will not lend without large security to small and medium builders.

    No cheap money and easy finance - Lot of projects (all kind of industries) will come to a halt or will not eventuate.

    Please Turn on real TV,Surf the real media world wide or talk your friends Overseas.

    It is all interconnected - FII are not risking there money in Indian Money Market (Look at the fall in INR)

    The Real estate boom Is well and truly dead.

    Need to wait for another 8-10 years for the next up cycle.
  • #2

    #2

    Re : Is it Over - Bubble burst by liquidity Crisis

    Every High has a Low. After all, we has everyone been heading? There had to be some stop or a slowdown. There needs to be a balance and with this global recession, people will also slow down. There is more to life than money and monetary growth. The Rat Race will only get Slower. Nasty remark, I know Cheers!

    Comment

    • #3

      #3

      Re : Is it Over - Bubble burst by liquidity Crisis

      Now, will you guys believe me?!

      Ricky,

      People like Natraj thought I was Nuts (pun not intended ) when I wrote my other replies about the 50% to 80% declines in RE.

      I have been stating this about the Greater Depression (even worse than 1930s) for nearly 2 years now.

      Hope you guys will listen now. HOLD OFF ALL PURCHASES. HOARD CASH.

      This time around, job losses will be significant. There will be an AVALANCHE of distress sales.

      cheers,


      Originally posted by rickyofsnow View Post
      India's growth was fueled by the abundant global cash liquidity.

      A corporate bank could borrow for 2% in Japan and invest in India's Debt market for 7% - 8%.Profit for nothing - Untill recently.

      Any Indian PE firm,Venture capitalist or large builder could walk in to global market with a project and money was thrown at them.

      Now the global cash flow has come to a grinding halt.

      Banks are not lending (Short term reserve) to another bank fearing the Bank would collapse.

      25 global banks have collapsed in 10 days (US,Europe and Asia).

      1 European country is Bankarupt (Iceland)

      18 major countries have entered recession (Includeing US,UK,Australia,Germany,Japan,NZ,South Korea etc)

      Leaman Brothers was 168 years old,It had survived the great Depression in 1930's but dead now.

      India Real estate will starve for cash.
      Builders will not buy new lands for future projects.
      Builders will sell most of their land bank for liquid cash.

      I am an Economist - I havent seen (Or heard) of fall currency and Index this fast.

      This is worst than 1930's Great depression.

      The fuel (Liquidity and cash flow) for the Real estate fire is over.

      Bank will not lend without large security to small and medium builders.

      No cheap money and easy finance - Lot of projects (all kind of industries) will come to a halt or will not eventuate.

      Please Turn on real TV,Surf the real media world wide or talk your friends Overseas.

      It is all interconnected - FII are not risking there money in Indian Money Market (Look at the fall in INR)

      The Real estate boom Is well and truly dead.

      Need to wait for another 8-10 years for the next up cycle.

      Comment

      • #4

        #4

        Re : Is it Over - Bubble burst by liquidity Crisis

        I agree with the author, the real state boom was empowered by too many +ve factors

        1. Cash Inflow from foreign Investers
        2. Home loan interest rates were quite low
        3. Boom in IT
        4. People buying more than one house on loan just for investment purpose
        5. Many NRI's buying houses in india for investment.
        6. Black money from politicians and other sources going in to reality

        now all of the above conditions have been reversed

        1. Foreign investers taking out money
        2. Interest rates too high
        3. IT Boom some what burst
        4. People who brought more than one home are desperate to sell their 2nd home
        5. NRI's selling their invested houses as they need the money there.
        6. Black money some what already invested and not giving that result. Some more can flow in but it can not change the fate of this industry.

        So the mantra is don't buy and for the ones who are greedy, sell ur property for a lesser profit.

        now all the +ve

        Comment

        • #5

          #5

          Re : Is it Over - Bubble burst by liquidity Crisis

          Hey wiseman what you say seems logical, hold onto cash now to make purchases when the market bottoms out and there are real bargains to be had. And something that all of us would like to believe. but assuming that the economy is about to go belly up in 2010 what is the guarantee that banks, the safest place to keep yr cash in these times, wont go belly up as well? what are the best places to keep yr cash safe?

          Comment

          • #6

            #6

            Re : Is it Over - Bubble burst by liquidity Crisis

            Good Question! NO ONE KNOWS!

            Hello Jiya,

            Very good question. Fact is, no one knows! REALLY! The supposedly best minds on this do not have any experience of something so severe (this may be even more severe than the 1929 crash which went on till 1938 and only ended because WW II started). My father who is 76 now was only born in 1932. Apparently there is a guy who actually was a broker in 1929. He is 102 years old and is still running a brokerage. He know!!!

            If things go extreme, the ONLY thing that may actually go up in value will be Gold (and maybe Silver). And don't believe the foolish analysts who just a few days back talked about Gold ETFs being the best way to invest in Gold (they are still talking about the normal world we knew last year!). Only reason to buy Gold will be to have the only thing of value when things go to extreme. And at extremes, guarantees on ANY paper will be worthless - even Gold ETFs.

            Buying some physical Gold (coins are best - especially Krugerands if you can get hold of any; bars are next best bet).

            Believe me! A once in a lifetime opportunity is coming up. I have seen 5 bear markets. This one has hardly hit and I'm getting a very chilly feeling. This one is going to end quite badly . I'm not normally so pessimistic!!!

            Meanwhile, keep your cash in your matress when things go really bad .

            cheers

            Originally posted by Jiya90 View Post
            Hey wiseman what you say seems logical, hold onto cash now to make purchases when the market bottoms out and there are real bargains to be had. And something that all of us would like to believe. but assuming that the economy is about to go belly up in 2010 what is the guarantee that banks, the safest place to keep yr cash in these times, wont go belly up as well? what are the best places to keep yr cash safe?

            Comment

            • #7

              #7

              Re : Is it Over - Bubble burst by liquidity Crisis

              But who know the Bottom. Every day morning you are seeing a new Bottom of the Stock market. It seems that it will go till 2010.
              Either land or AIR and FOOD. Choice is yours.

              Comment

              • #8

                #8

                Re : Is it Over - Bubble burst by liquidity Crisis

                Its quite easy to mark the bottom when it happens

                Originally posted by arin_12 View Post
                But who know the Bottom. Every day morning you are seeing a new Bottom of the Stock market. It seems that it will go till 2010.
                Hello Arin,

                Finding the bottom is not a big deal. It comes when there is a combination of

                1. complete hatred towards stocks

                2. Total CAPITULATION (meaning surrender) by investors and total sellout

                3. Total APATHY (indifference) towards anything to do with markets and business.

                Of course, this coupled with small upward movement in sales and profits along with Charting Analysis (I use Eliott Wave) can give pretty good bottom indicators.

                The problem is not with the bottom. The problem is, when bottom is reached, people are so DISBELIEVING that they miss it by rejecting it as YET ANOTHER FALSE BOTTOM !

                We are NOT in a bottom yet because none of the 3 conditions have been met yet and so it is a long way off.

                In fact, since I advice people on the markets, the following was my prediction in Dec 2007.

                1. 12000-15000 in 2008 (this was when Sensex was above 20000 )

                2. Below 10000 in 2009

                3. Bottom of 8500 - 9000 either in 2009 or 2010

                Sell everything and get back into markets below 10000 with 4-5 times quantity. This is coming through as many stocks are more than 80% down!

                t that time, people thought I was completely MAD!!! . Now I have all of them asking me, what next?

                So, everytime the TV analysts called (false) bottom, I told my guys to stay steady and keep shorting the market. You think RE makes good money? Consider this. I went short with a small 4000 Put option for Oct settlement at 4505 for Rs.60. Today its priced at 1080, which is a 1700% return in 45 days. A 5000 rupee investment gives you 90000 back!!!

                I have subsequently revised the bottom now below 8500. This one is going to be long and very hard.

                But bottoms are quite easily recognised by the person who is trained and experienced in recognising it.

                cheers

                Comment

                • #9

                  #9

                  Re : Is it Over - Bubble burst by liquidity Crisis

                  hello guys. dont u think that u all are reacting too much. i accept it is not a good time for our economy but we all have to be optimistic.

                  i knw market is runingat the speed of a turtle , but rbi and fm are taking significant and appropriate steps to overcme this barrier. and u knw vry well that who wins at the end.TURTLE.

                  If u want to invest ur money then investing in gold would be one of the good option. u can invest ur maoney in real estate also.


                  wat say?

                  Comment

                  • #10

                    #10

                    Re : Is it Over - Bubble burst by liquidity Crisis

                    is there any one who can diffrentiate between BANK RATE n REPO RATE?

                    Comment

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