Eurozone near the abyss: OECD

[semven]

Taipan...Get some help for your OCD

[Taipan]

Ah the rat. Only person in the stands cheering for Greece.

You really have no idea how bad this is going to be do you Semven? As far as you are concerned ill give you a big hint. You’re going to need to reinvent yourself!

Yes i have plenty of time to consider how phucked up the world is because of too much debt. Used to be Bank debt. Now its sovereign debt.

2012 will look like the 1930's and the great depression. Back then they used Keynesian economics to borrow and kick start the economy.

Now they can’t because they are already broke.

It will bring Europe down. More than likely will be the final nail in your bubble which will bring it crashing down.

Smart money is in cash with debt paid down. If your into Vancouver real estate in the last few years - well your screwed.

[Taipan]

So you dont think europe will affect you and the Vancouver property market - wrong.

Where ever you read Australia replace it with Canada. More then likely you wont be told what is really going on because they dont want you to understand.

They will of course seek to profit from your stupidity. The only choice is make sure your not one of the suckers that gets taken down.

How the Banking Crisis Affects the Real Economy

By Dan Denning • December 19th, 2011 •


The banking crisis will mean small Aussie businesses may start to feel the crunch of Europe's credit crisis in 2012, according to Wesfarmers Managing Director Richard Goyder. "European banks have to comply with Basel III but they can't raise capital, so they are shrinking their balance sheets by selling debt here to local banks, taking liquidity out of the market," Mr Goyder told the Australian.

He referred to the example of French bank BNP Paribas. The French bank - perhaps anticipating the downgrade of French government debt - is winding back its lending commitments all over the globe. Here in Australia, BNP has withdrawn from its participation in the $3.7 billion Victorian desalination plant.

Now, before you go thinking that's just common sense, given the desal debacle, BNP withdrew its financing of $2.1 billion for the financing of the Sevenwest Media deal. This is a sign that European banks are getting cold feet about the "syndicated loan" market. That's where a bunch of banks pool their loans together to finance a project.

Mr Goyder says, "It's not an issue for Wesfarmers because of our investment-grade rating, but it's a real issue for SMEs (small and medium-sized enterprises)." He's partly right. Big businesses (especially banks) will always get the benefit of a government guarantee or access to bank finance. It's the smaller companies that won't be able to get bank financing in a Credit Depression.

But it's a global issue too. And that makes it an issue for Wesfarmers and every other blue-chip company and every blue-chip shareholder. This is how the Credit Depression impacts the real economy in a global way, through "trade finance". Global trade between importers and exporters needs short-term credit from banks to thrive. If banks don't fund that trade, it doesn't happen. Real goods and services stop crossing borders.

Trade finance is what gives far-flung businesses the confidence to make deals with one another. "More than 90 percent of commercial transactions in the world require such credit, but the current crisis is forcing banks to hold on to capital and liquidity, leading to the lending market drying up and making credit more expensive," according to AFP.

All this talk about liquidity, insolvency, and the choking off of trade finance is enough to make a banking regulator nervous. And sure enough, Friday's Australian Financial Review led off with the headline "Banks told to prepare for the worst". The article claims Australia's banks have been given exactly one week by the Australian Prudential Regulator Authority (APRA) to, "model the impact of a worst-case scenario resulting in contraction in gross domestic product, an unemployment rate of 12 per cent, as well as a 30 per cent decline in house prices and a 40 per cent drop in commercial property values."

That does not sound like a worst-case scenario. That sounds like the end of the world. In which case, a model is irrelevant anyway. The banks may as well have just replied: "We will be utterly destroyed."

But at least one of the banks says that APRA has made no such request. On Friday, ANZ Chairman John Morschel told an annual general meeting audience that, "We're not aware of any requests from APRA to complete a review on that basis within a week."

There's been precious little reporting on the story. But it's an interesting idea. Why would APRA require banks to suddenly model an end-of-the-world financial scenario? We can only think of three reasons.

The first reason is that the regulator wants to see if the banks are up to it. Are the banks fat and contented with their multi-billion-dollar profits? Or do they allow themselves to be kept up at night by modelling a worst-case scenario? Maybe APRA is trying to scare the banks into better risk management.

A second reason is that APRA really is conducting stress tests. Typically, in our view, the purpose of a stress test is not actually to model a worse-case scenario. It's to produce an "all clear" report on the banks that gives foreign investors confidence in Aussie bank debt and domestic depositors confidence that their money is safe. If that's the case, APRA may think the banks need a boost in capital markets and that a clean bill of health would provide it.

A third reason is that APRA itself is a little alarmed. About what? About how Australia may be affected by affairs in Europe. For instance, the ratings agency Fitch said on Friday that it believes, "A comprehensive solution to the eurozone crisis is technically and politically beyond reach." Fitch also downgraded its outlook on French government debt and put six other countries - including Spain and Italy - on negative ratings watch.

Why so busy, Fitch? From the UK Guardian...

"In Fitch's opinion, this [a comprehensive solution] requires more active and explicit commitment from the European Central Bank to mitigate the risk of self-fulfilling liquidity crises for potentially illiquid but solvent euro area member states... In the absence of a comprehensive solution, the crisis will persist and likely be punctuated by episodes of severe financial market volatility."

That sounds about right, which means 2012 could be a lot like 2011. That sounds depressing. Fitch also spoke poorly of some major global banks. It downgraded Bank of America, Goldman Sachs in Barclays, BNP Paribas, Deutsche Bank and Credit Suisse.

So here we are at the end of the year. Banks lack liquidity, which they can get from central banks. But European banks especially are stuffed with government bonds, and that's a solvency issue. Meanwhile governments themselves need more money...money they can hardly borrow from banks that don't have it.

The solution to this riddle is obvious and has been staring us in the face all year. Tomorrow, all will be revealed, including a starring role for the Reserve Bank of Australia. Until then...

Dan Denning
for The Daily Reckoning Australia

[tdma800]

Taipan...Get some help for your OCD

I formally and seriously, with a touch of formality, declare, +1

[Taipan]

Want me to leave boys?

I’m making you nervous?

Upsetting you?

You just want to talk about how much money you have made if you sold your condo or FSH in Vancouver this week.

Or you’re a tout who want the unwashed masses to just keep buying and driving prices up. Keep the gravy train going.

You certainly don’t want a different point of view. You certainly don’t want them to think for themselves.

I’m just pointing out the real world, and how screwed the majority of you are. So don’t shoot me!

We all know the impact. a 10% drop in prices would wipe how many out and put how many completely on the line? 1% increase in interest rates forced on Canada by international markets, massive listings, resulting in plunging prices. Your own version of toxic debt called CHMC. If you have massive exposure to Vancouver real estate then you have a massive risk exposure.

Why are you screwed? Because your way in over your heads in debt. Debt that caused a massive property bubble. Most of you have 90% or more of your net worth exposed to this bubble. Most massively leveraged with relatively only small amounts of equity.

What could you have done to avoid this issue.

Sold real estate tick, paid down debt tick, cashed up tick, retained some bank debt and offset against cash with your bank (in expectation of international credit squeeze) tick, ensured that you aren’t susceptible to foreign exchange movements tick, ensured you have physical gold as part of your portfolio, on the to do list for today. Last thing to do this year. Buy physical gold bars and a shit load. It only gets worse here on in.

[Taipan]

Overnight the ECB = European Central Bank Issued $490b euro's of loans.

This is a system that is well and truly broke. So where did the money come from?

And that was the question the market was asking.

To put it in Vancouver speak. Youve got a loan of $950,000 on a place worth $1m. Cant pay it back? No problems! We will give you another $1m in cash and then you can keep the payments going.

Of course the next question becomes what will they do with that money. In Vancouver they would of course buy more houses and leverage further into the market just exapanding the problem.

Debt is the central issue, and only some of us are prepared to face of it. Usually those who have got rid of debt.

ECB loan stampede spooks global markets

By Elysse Morgan

Posted December 22, 2011 09:27:30

An overwhelming demand by European banks for low-cost unlimited loans from the European Central Bank has global investors worried that more banks are in more trouble than they thought.

The Dow Jones Industrial Average closed flat at 12,108 following yesterday's 300-point rise, which was one of the biggest of the year.

The S&P 500 also was relatively flat, just 0.2 per cent higher at 1,244, and the technology focused Nasdaq finished down 1 per cent to 2,578.

A 14 per cent fall in software maker Oracle shares weighed on the Nasdaq after it missed earning forecasts for the first time in a decade and gave an outlook that renewed fears of a slowdown in the sector.

The European Central Bank has made its first-ever offer of unlimited three-year loans at next to no interest to commercial banks.

Hundreds of European banks applied to take-up the 490 billion euro ($635 billion) offer, which is many more than anticipated.

That has rattled investors.

The move will ease tightening in the credit market and free up liquidity in the financial system, helping vulnerable commercial banks rebuild their finances.

But there are concerns that banks will not use the cash to buy sovereign debt and ease the crisis.

European markets all erased some of yesterday's gains, as investors digested the implications of the ECB loans.

In Germany the DAX fell 1 per cent to 5,792 and in France the CAC lost 0.8 per cent to 3,030. London's FTSE 100 closed 0.6 per cent lower at 5,390.

On commodity markets oil prices were tracking higher; in Singapore Tapis closed up at $US116.52 a barrel and West Texas crude was worth $US98.94 a barrel.

Spot gold was slightly down, at $US1,615.23 an ounce.

Hmm gold is starting to look attractive

[Taipan]

Banks gorge on record euro loans

Updated December 22, 2011 10:52:36

Related Story: Banks set for worst as eurozone fears gather

Banks have gobbled up nearly 490 billion euros ($635 billion) in three-year, cut-price loans from the European Central Bank, easing immediate fears of a credit crunch but leaving unresolved how much will flow to needy eurozone economies.

Following a string of failed attempts by eurozone leaders to thwart market attacks on the bloc's weaker members, hopes of crisis relief before year's end had been pinned on a massive uptake of the ECB's ultra-long and ultra-cheap loans.

The near half-trillion euro take-up of ECB funds represented the most the bank has ever pumped into the financial system and exceeded almost all forecasts. A total of 523 banks borrowed, with demand way above the 310 billion euros expected by traders.

"The take-up was massive ... much higher than the expected 300 billion euros. Liquidity on the banking system has now increased considerably," said Annalisa Piazza at Newedge Strategy.

The funding should bolster banks' finances, ease the threat of a credit crunch, and may tempt them to buy Italian and Spanish bonds, thereby easing the currency area's sovereign debt crisis.

But analysts said there was little prospect of the cash being hurled at the debt of eurozone weaklings and, while an interbank lending freeze may have been averted, the lack of trust between banks to lend to each other remains unresolved.

But optimism that the lunge for funding would ease Europe's two-year-old debt crisis quickly faded, sending the euro and stocks lower after an initial jump.

Banks have struggled to attract funding mainly because of worries about the underlying health of eurozone countries and their exposure to it, so becoming more reliant on the ECB and pledging more assets against those loans may add to the problem.

"It's helpful. It's more than a sticking plaster, although it's by no means the solution longer term," said Chris Wheeler, bank analyst at Mediobanca in London.

The debt problems of Greece, Portugal, Ireland and now Italy and Spain have taken the eurozone's troubles to new heights in recent months and raised serious questions about whether the euro, the currency shared by the 17 eurozone countries, can survive in its current form.

While a lending crunch may have been avoided thanks to the ECB's latest move, it is much less certain that banks will use the money to buy Italian and Spanish government debt, as French president Nicolas Sarkozy has urged, given the competing pressures on them to cut risk, rebuild capital and lend to business.

"While this might help to address recent signs of renewed tensions in credit markets and support bank lending, we remain sceptical of the idea that the operation will ease the sovereign debt crisis too," said Jonathan Loynes, chief european economist at Capital Economics.

Limited effectiveness

Banks will not increase their exposure to sovereign debt because European Bank Authority (EBA) rules discourage it, Italy's banking association (ABI) said.

"The EBA rules are a deterrent for buying sovereign bonds, so not even the ECB's important liquidity injection ... can be used to support sovereign debt," ABI director general Giovanni Sabatini told reporters.

Given those doubts, most market experts say only more aggressive and direct buying of government bonds by the ECB will help ameliorate the crisis, something it is reluctant to do.

Italy alone faces about 150 billion euros of debt refinancing between April and March and data on Wednesday showed its economy - the eurozone's third largest - shrank in the third quarter, while the ABI forecast a recession next year.

One of the key factors certain to have boosted demand is that banks are now more reliant than ever on central bank funds. The ECB said on Monday, in its semi-annual Financial Stability Review, that this dependency could be difficult to cure.

French banks have almost quadrupled their intake of ECB money since June to 150 billion euros, while banks in Italy and Spain are each taking more than 100 billion euros.

ECB president Mario Draghi had been pressing banks to take the money since announcing the plans earlier this month. He warned of a chance of a credit crunch on Monday and said eurozone bond market pressure could rise to unprecedented levels early next year.

The three-year funds were offered at an interest rate which will be the average of ECB's main interest rate over the next three years. That benchmark rate is, after a rate cut earlier this month, at a record low of 1.0 per cent.

For some banks the new money could be more than 3 percentage points cheaper than they can get on the open market. As part of the deal, they were able to convert one-year loans they took from the ECB in October into the new three-year loans and also will be able to pay it back after just a year if they so wish.

The ECB was already lending banks 515 billion euros before Wednesday but the new loans will not simply stack on top.

Banks switched 45.7 billion euros out of the one-year loans they took in October. They also scaled down their three-month borrowing from the ECB to 30 billion euros from 140 billion and almost halved their intake of one-week loans this week.

Analysts at Royal Bank of Scotland said the actual amount of new money going in to the system as a result of that juggling reduced the headline number to around 200 billion euros.

"The key question now is whether this net new liquidity addition of close to 200 billion euros will be used to purchase sovereign bonds, lend to the economy or pay maturing bonds," said RBS economist Nick Matthews.

AFP

[semven]

Buy some Townhouse development land in South Surrey. It folks decide to do some "profit taking" they will sell their SFH in Vancouver and move out to the bedroom communities and downsize at the same time.
Taipan is an idiot.

[Taipan]

Very pleased to see im ruffling vested interest groups feathers. See readers, Mousey is in the game and thinks that its going to continue up in perpetuity.

Yes mousey - for all those in the game - the last thing you want is somebody raining on your parade.

Trying to off load some land are we?

[Taipan]

Now lets get back to Europe. Credit wise we are all interconnected on this planet.

If the Euro crashes it will have a massive effect world wide. We all saw the effect that GFC1 had. We all saw the crashing prices in Vancouver because of GFC1.

Well GFC2 will start in europe and it will affect us all and that means you. No 7.5% increase in house prices in perpetuity.

There is absolutely no doubt that Vancouver will have a massive property fall of at least 50%. The only question will be whether you do it over 2-3 years of maybe 7% a year for 7 years.

Here is an interesting piece from a few days ago by Michael Platt, founder of the $30 billion hedge fund BlueCrest Capital Management LLP, talks about the European debt crisis, euro-zone banks and investment strategy.

http://www.bloomberg.com/video/82844550/

Transcript of the interview.

Platt on Europe's sovereign debt crisis:

"The level of concern of what we have about what is going on in Europe is absolutely huge. When you see evidence all over the markets these days that they are pricing for the potential of the eurozone break up is clearly none zero, it is contrary to what everything is set by policy makers and by central bankers. We distill it down essential fact that we continue to focus on at BlueCrest Capital Management - if you look at the debt of Italy at 120% of GDP, which is increasing at a real rate of 5%, and if you look at the GDP, which now is forecast next year to be declining, arithmetically their debt is going to blow up. And we don't see anything happening at the policy level that gives us any indication that there's anything that's going to convert this situation from where it is now to a much more substantial and real crisis in the future."

On whether a blow up of Italy will force a breakup of the Eurozone:

"We need much more radical measures to prevent this from happening. If Italy and Spain are forced to roll their debt over, which will be in the order of $600b euro, if they have to pay rates between 5 and 7% for this, then the situation in Europe is unsustainable. We're not going to have any euro bonds, we're not going to have a full political and fiscal union where the transfers will take place. It seems what we're going to have is an attempt to control the European situation through continued austerity, which is pro-cyclical. As the economy slows down, we end up with more austerity which creates more slowdown. We also have a requirement for banks to increase capital, therefore we're looking at a 3 trillion euro takedown in European balance sheets. There's basically nowhere I can see where we can get any growth from."

On whether cultural and political divides between nations in Europe have played a role in the crisis:

"Absolutely, it's about the cultural and political divide. The reality is that there is no willingness within the Eurozone to share wealth. In the United States, if California is having a really difficult time, the rest of the United States will send money to California. This is not the case in Europe. There is no willingness to transfer money across boundaries in a long-term and sustainable way."

"The market prices the probability of a euro breakup to be distinctly non-zero, despite what the politicians say. I believe that the eventuality of a European breakup is so awful, that more and more drastic measures will take place as time goes by. The ECB is probably the only institution that can tackle this problem, but it doesn't have a mandate to do so…As time goes by, my view of what's required is a radical change of policy from the ECB to tackle this problem."

More on Europe's problems:

"The probability that the market is putting on a Eurozone breakup, in my opinion from evidence I'm seeing from option pricing across the different markets, is steadily rising…We're going into 2012, and in our opinion, it's only going to get worse."

"There is a sensible argument you should not price and the whole loan in response to where the government trades because the government has the ability to remove assets and put them on their own balance sheets."

"The problem with Europe is that almost every part of it has gone wrong now. The banks are undercapitalized…If banks were hedge funds, and you mark them to market properly, I would say that probably most of them are insolvent. [Most of the banks in Europe are insolvent right now] if they were marked like I am at a hedge fund, yes."

On whether BlueCrest's relationship with banks has changed:

"I do not take any exposure to banks at all if I can avoid it. All the money at BlueCrest Capital Management is in Two-Year U.S. government debt, Two-Year German debt, we have segregated accounts with all of our counterparties. We are absolutely concerned about the credit quality of the counterparties."

On whether he's afraid of taking risk right now:

"Absolutely. The main thing that's driving our decision about where to lend money or where to place our funds under management, the vast majority is dollars which we keep in two-year notes. We have a chunk of euros, which we keep in German two-year paper. We're not interested in taking any peripheral debt risk at all and we're not interested in taking any bank credit risk right now."

On the United States and Germany:

"I think they're the best of the bunch. I feel pretty good about the United States. I don't really have an issue because I think the complete control that the authorities have, particularly the Fed and its bond buying program, we do not have issues about having money in Two-Year securities in the United States. In Europe, you've got to put your euros somewhere. It is a much more difficult place to make a decision. Two-year German notes seem like a reasonably safe bet right now, certainly compared to anything else."

On making money in a crisis:

"The most important thing to remember about crises is you do not make your money going into the crisis. When you go into a crisis such as 2008, markets trade against positions. People have positions on and people need to get risk off. All the things that people thought were a good idea start going into reverse. The big money you make in trading is more in the aftermath of the crisis. In 2009 we made 60% with no down months on our master fund."

On whether BlueCrest is looking at illiquid investments:

"I would not touch an illiquid product with a barge pole, to be honest. We're going into an environment where banks need to delever. Illiquid assets will be coming on to the streets everywhere. The price of liquidity in my opinion will go up. I don't want to own any illiquid assets whatsoever. The strategy at BlueCrest is to be in super liquid products, things that can be turned around in a day."

"It would have been the end of my business in 2008 had I done such a thing. Anyone who had an illiquid position within their hedge funds, there were runs on those hedge funds because people wanted to get the cash out and not be side pocketed with the illiquids. In 2008 I paid out $9.5 billion to the street because I was the only hedge fund that was up a lot and completely liquid.

On whether we'll see a repeat of the 2008 credit crunch and whether those that hold illiquid assets will get crushed:

"That's what I think, yes. I think so. In my opinion, what's going on now is significantly worse than 2008…The European debt situation is fundamentally completely unstable. The process of refinancing your debt with a real rate of 5 when you have negative GDP growth, and we are heading into a recession in Europe, arithmetically can turn all of the countries in Europe, given enough time, into Greece."

On how closely tied America's futures and the potential for investment are to Europe's debt crisis:

"Clearly it would be a huge drag on the U.S. economy. We're talking about in Europe is a situation of instability driven by pro cyclical policy, removing the ability of banks to invest in sovereign debt. We're talking about pro-cyclical policy of governments not being able to deficit spend by law. We're talking about existing deficits that need to be closed. We're talking about an increase in the amounts that governments will have to find when they're
Forced to refinance their rolling over paper this year at real rates of interest, which are way beyond anything they will ever be able to achieve in terms of growth."

On how BlueCrest continues to make money through the slowdown:

"Because we are traders and do not take any credit risk and we're super liquid. In the time that BlueCrest has been around, we have made $17 billion of trading profits for our investors…so in an environment like this where we are a very secure trading strategy, taking no credit risk, not buying anything illiquid, that is the kind of thing investors frankly really want to hear from someone like me."

On where he's seeing investment opportunities:

"I think the major opportunities will come post the blow up. I think for the time being you want to keep it quite simple. You do not want to take any credit risk. I think volatility in certain markets is very underpriced compared to what's potentially about to happen. I think if we go into a crisis scenario, things like German bunds could be more expensive than they are right now. And I think as the crisis intensifies through the process of governments refinancing and deficits becoming more unstable and growth deteriorating in particular, I think those kinds of trades will play out in the market and be profitable."

On moving BlueCrest from London to Geneva:

"I did not really want to be exposed to the Eurozone. I don’t want to be exposed to regulation coming out of the Eurozone. Most of my clients come from the United States. I am not really marketing to the Eurozone anyway. So it didn't make much sense for me to be in the Eurozone as a business."

[Taipan]

Thanks to Jimtan for his link to "The Telegraph".

This isnt the old Taipan just being negative. The words, "now is a good time to buy", is the equivalent of would you like ice in your drink on the deck of the Titanic.

Interesting article about how England is preparing for the eurozone breakup.

Dont forget that the Germans have the Bundesbank printing Deutschmarks. They're ready to pull the pin.

This will have massive and world wide repercussions.

And why - what is the one key component - TOO MUCH DEBT.

And buyers in Vancouver would never do that. Borrow 95% and put the 5% on the credit card. Plenty of stories like that in BC property forums!

Treasury plans for euro failure By Philip Aldrick, Economics editor 10:00PM GMT 26 Dec 2011

A break up of the euro would have a devastating impact on the UK. HSBC economists have warned that it could trigger a global depression and forecasters at the Centre for Economic & Business Research reckon it would knock about a percentage point off UK growth – plunging the country into a full-blown recession in 2012.


Apart from Vancouver of course where prices only go up!


The Treasury is working on contingency plans for the disintegration of the single currency that include capital controls.


The preparations are being made only for a worst-case scenario and would run alongside similar limited capital controls across Europe, imposed to reduce the economic fall-out of a break-up and to ease the transition to new currencies.


Officials fear that if one member state left the euro, investors in both that country and other vulnerable eurozone nations would transfer their funds to safe havens abroad. Capital flight from weak euro nations to the UK would drive up sterling, dealing a devastating blow to the Government’s plans to rebalance the economy towards exports.


Earlier this year, Switzerland was forced to peg its currency to the euro to protect the economy after a massive appreciation in the Swiss franc due to spiralling fears over Europe.


The plans emerged as Spain’s new finance minister Luis de Guindos warned the country’s economy was set for negative growth in the last quarter.

Speaking yesterday he warned the next two months “are not going to be easy”.

[semven]

What a fucking psycho
Gets on the internet from Australia to warn BC about the Eurozone.....

[jesse1]

Taipan I agree the next few months will be fireworks for the Eurozone. It will look horrible but I think under the surface they have all their plays written down and they will generally act to contain fallout as the US did in 2009. I think Greece will partially default in January.

This makes Canada's situation a bit more interesting, there will be impetus to cut rates but a big drive to ensure debt levels are capped and even starting to decline as a % of income. This makes any moves by the government to reduce borrowing difficult to time. I'm expecting good odds of a government announcement on loans rather quickly after the new year. Flaherty and Carney know the Eurozone plans; too bad few else do...

[Taipan]

1)What i say on here, will not move markets. It may make a few sensible people think. And that is a good thing.

2)Said a dozens of times, im looking to buy a recreational property in BC interior.

3)The cash is sitting in my bank account in Canada. Removes foreign exchange risk. I dont need to borrow anything to buy. So I could buy tomorrow - but then i would be a friggin psycho!

4)Im very patient, while i wait for the market to correct to normal levels. How patient? Over 3 years! Last time i came over I rented - doesnt worry me. Renting is fine.

5)Last offer I made in June 2008 - the owner still hasnt sold. In fact in that segment of the market there were 0 sales this year, last property sold January 2010 (2 years ago) and the stock is building up.

6)Around the world, markets are crumbling, and you would have to be totally delusional to think it wont effect Vancouver. That is stupid to think that it is some oasis. Yet we have a few here who will try and tell you that.

7)And while I wait, ill continue to post conflicting economic facts, uncomfortable realities, that will affect Vancouver, on a forum where a number of posters have undeclared vested interests.

It would be nice for all those who are in the industry or feed off the property industry on this board to declare their interests. Semven why dont we start with you.


Jesse, im making a couple of major calls at the moment. Foreign exchange and gold. (Gold of course is denominated in US$). Got to be as liquid as you can at the moment.

The interesting thing is that Canadian interest rates are barely off emergency rates. Youve got practically nowhere to go. The banks in Australia are basically saying that the central bank may reduce rates, yet the margins will increase as the cost of money in the markets rise, with the net effect of very little downward movement

Two key issues in all this is economic reality and fear and greed. And they are world wide not just the USA or Europe. 2012 will seem like the end of the world for many.

You build up these bubbles and it is very painful as they unwind.

[semven]

Now lets get back to Europe. Credit wise we are all interconnected on this planet.

If the Euro crashes it will have a massive effect world wide. We all saw the effect that GFC1 had. We all saw the crashing prices in Vancouver because of GFC1.

Well GFC2 will start in europe and it will affect us all and that means you. No 7.5% increase in house prices in perpetuity.

There is absolutely no doubt that Vancouver will have a massive property fall of at least 50%. The only question will be whether you do it over 2-3 years of maybe 7% a year for 7 years.

Any other Nostradomus like predictions on what will happen to the outlying areas?