Deflation is now kicking in big time it seems. The rest of the world except Russia, India and SA are already in official deflation. The SA CPI seems to be resisting but our PPI is already negative.
A good indicator of where the lagging CPI is heading is the Argus food basket. It had a big drop this week and is now showing annual deflation of 11% . The trend indicates that it could even be food basket deflation of 18% by Christmas.
This has to show up in the CPI. The inflation chart indicates that we are following a downward channel that could take us to minus 2% next year.
With real prices needing to drop 40 to 50% to get us back to the norms and with no inflation to assist that real price fall, all we have left are nominal house price falls.
However, this scenario only addresses the economic risks domestically. Pursuing monetary policy such as that which the Obama administration is promoting can also create significant difficulties in international markets that can ultimately result in another international economic meltdown.
Current U.S. fiscal and monetary policies have produced a tidal wave of financial outflows into foreign stocks and financial markets, and that outflow is intermingling with similar resource flows emanating from every other nation who has also engaged in stimulus-oriented economics.
Granted, this economic outflow has also a stimulated a massive inflow of capital via an accumulation of foreign exchange reserves from international central banks and has financed the ever-growing federal deficits. However, this policy has likewise contributed to a balooning stock market bubble in the U.S. as well as fueling dangerously volatile asset bubbles internationally.
In fact so much of this “funny money” is moving throughout international financial markets that a growing number of foreign banks and international economic policymakers are petitioning the Federal Reserve to curtail its rampant monetization efforts in the interest of stymieing what many fear may be another round of unchecked economic stimulation that may lead to another international economic crisis. Manipulated U.S. currency expansion contributes to price inflation internationally, thereby fueling an ever expanding number of asset bubbles – promoting even more injudicious investments fueled by too much money chasing too few investment opportunities.
Of course, one would think that the Fed chief and other administrative economic advisors would be sensitive to these untoward effects of U.S. fiscal monetization. However, all evidence seems to suggest that the administration is either unaware of such effects or comparatively disinterested.
Are we in an “everything bubble”? That is, are the recent huge rallies in gold, stocks, and most other asset classes in the world mostly mostly attributable to the type of blow-off top action you get when bubbles start to pop?
I don’t know how many bubbles we’re living in right now, or even if we’ve even entered truly bubblicious territory or if we’re just on the way to bubble creating everywhere. I do know this – the Fed/Treasury/White House/Congress have created a bubble in the money supply in this country. Here, look what the Fed/Treasury/White House/Congress are doing to the money supply:
True, I don't know how all this is going to end. There could well be inflation down the line. I can only react to what is happening now and in the near future - and for the the next 2 or 3 years SA it looks like we will have deflation.
If the carry trade collapses and the rand plummets, I guess that will be inflationary.
On the other hand, could we be entering a Japan scenario all over again with long drawn out deflation for years.
ad it was not that one although they seem to be saying the same thing. CJ do you think we are going to see deflation across the economy? apart from electricity? Motor manufacturers were threatening car price increases a little while ago. Wonder where deflation would leave them in a years time.
The thing is that deflation kills governments through declining tax revenues..they much prefer inflation and where they get to spend the money first (and so getting the greatest purchasing power)before it feeds into the rest of the economy and fuels inflation.
I have begun to have a look at the money supply in SA. Lo and behold in 95 and 96 there was growth of 15 to 20%. It didnt take long for the ANC to turn on the printing presses. Then 7.5% at end-2000 to 17% at end-2001. Much of the inflation we have experienced over the last 14 years can be squarely laid at this governments door. The lack of transparency, reporting and analysis of what the SARB does in this country is shocking. People think that Trevor Manuel is a hero...what bollocks.
Anyhow CJ Just looking at the gold price could mean that investors at least fear inflation...or its just stimulus money looking for an investment...or both.
However looking on the deflationary side:
"WASHINGTON (Reuters) - If the global recession is over, consumers must have missed the memo. High and rising unemployment, low confidence and blown savings have left households in much of the developed world feeling frugal -- and governments scrambling for new ways to tempt them to spend."
All I know is that there are way too many converging trends for this to be just another recession...abstract values no longer make sense and eventually will be rejected...its just a matter of time.
The global inflation push unpacked by George Ure of Urbansurvival.com
http://urbansurvival.com/week.htm
What's really going on under all the environmental ink is that too many people (globally) are waking to the real agenda which is being pushed by the UN, G-20 and all the rest: Global Government.
This is a topic the John Birchers were warning about what? 40-years ago...and here we are with arguably the most socialist government ever to haunt Washington and the John Birch Society was right after all. Far right sometimes, but right is right....
But THE biggest stumbling block to a global coup by the bankster and ruler class has been a lack of money to do their dastardly deed with. But wait! There's movement on your (left) flank as the "UK joins G20 push for Bank Levy".
Main point of this story is the concept of a global bank tax in order to fund future bailouts owned by The Chosen Few. Pass....
The clear and present danger is that some super-organization that's NOT DIRECTLY ELECTED begins to tax everyone in the world. Don't know about you, but I don't remember voting on G20 membership, do you? But that's how the plan's gonna roll, and the great (socializing) of world government needs a funding source and control of the global currency picture.
I'm not trying to sound alarmist at all this, but that's how it's all rolling out: A global synchronized inflation to beggar the working people's of the world.
As a free man, I don't recall anything under the Constitution that provided for the US to contribute to - let alone join - some global government...but it's early yet. Was G20 membership voted on anywhere? I can't recall...
What Gore et al are pushing for (among other items) is carbon credit trading because without monetizing climate control, it's not going to happen. However, given money, or taking it, then anything is possible in the scramble to control the planet. Which, in case you're asleep, is the uber macro picture of what's going on here on Ant Farm Earth.
Remember, from a "power to control" standpoint, the objective is to get a system of global taxation in place which is 'above direct control of the people'. Accomplish that and you smash down the barriers of nationhood and you can install World Government.
Related Data point: Interpol now has its own passport:
"SINGAPORE – INTERPOL today issued its first ever passports which will enable Heads of National Central Bureaus (NCBs) and staff to travel internationally without requiring a visa when assisting in transnational investigations or urgent deployments to incidents.
George Ure spends a lot of bandwidth saying Climate Change is a hoax designed to make the "Elites" lots of money. I'm positive that the "Elites" will make a lot of money and that their activities won't help solve GW one bit but I starting to get pissed off at people that say GW is a hoax by "envirofacists" etc. Then there are those "elliot wave" stuff he's so into. I don't know. A lot of what he says is probably true re: the economy and so on but I wouldn't take everything he writes as gospel. One of his main fantasies is getting rid of all the Mexican illegals in the USA, as if that would solve all their problems. Approach with your sceptics cap.
I agree Benny, sceptics hat. I post snippets from both MSM and AltM, it doesnt necessarily mean I agree with everything they say.
George Ure doesnt believe in Global Warming Theory however does believe in Climate Change btw. I share the same view. I also believe in Occam's Razor http://en.wikipedia.org/wiki/Occam%27s_razor
The sun is responsible for 98% of the earths heat while carbon dioxide is a trace gas with a density of 0.04% of the atmosphere. This CO2 is mostly emitted naturally from the oceans and a fraction is man made. You figure it out. Carbon tax or Cap and Trade is nothing but a tax on breathing.
Looking bigger picture here...the world has run out of major economic drivers...computers, internet, cellphones then property all had their turn. As this has either reached saturation or collapsed what is there left? A green bubble...solar, cap and trade, carbon credits, biofuel, massive eco infrastructure etc
Climate Change is a reality but its a natural cycle as with the Maunder Minimum or an ice age. The arrogance of man to say he is causing it and by monetizing it he will make it right is laughable. Personally I worry more about loss of biodiversity due to GM, overfishing and dumping of nuclear waste.
George Ure, Nouriel Roubini, Gerald Celente et al called the economic collapse a long time before it happened...I am more inclined to believe them and any longwave economist than the likes of Trevor "we can avoid a recession" Manuel or Helicopter Ben
Hmmm, are we talking avout the same "Man" here who has already domesticated whole continents, drained whole seas, created whole countries out of the sea, diverted 40% of the planets liquid fresh water for his use, chopped down at least 1/3 of the planet's forests and is on track to consume every single last edible fish stock by 2048 (amoung many other impressive and/or horrifying achievements?
You're saying "Man" can't alter the composition of the planet's atmosphere even 4/100 of a % over 200 years? Fuck off.
Okay maybe "fuck off" is a bit harsh. Sorry. But I if humans are not responsible for the CO2 increase it definately isn't because we didn't have the time and means at our disposal. Hell, humans have the power to start an Ice Age next week if we set off enough bombs, surely 6billion of us working together can cause a much smaller and more subtle effect over many centuries.
We both agree on all things except basically The Greenhouse effect. This is still just a theory and has never been proven. Before I move on please read the following article which will give you a bigger picture on what is happening to the planet at this time (like the Electromagnetic Crisis: read billions of cellphones, satellites, wireless etc)
http://realitysandwich.com/polar_reversals
The reason why this is all pertinent to a property blog is that property values suffer the same malaise of abstract values, greed and the disease of monetizing everything and the unsustainable perpetual growth model. This is what a global tax on carbon and a green bubble is all about...perpetuation of this model, not its solution.
Another article from a different author on Realitysandwich.com... Charles Eisenstein.
The crisis we are facing today arises from the fact there there is almost no more social, cultural, natural, and spiritual capital left to convert into money. Centuries, millennia of near-continuous money creation has left us so destitute that we have nothing left to sell. Our forests are damaged beyond repair, our soil depleted and washed into the sea, our fisheries fished out, the rejuvenating capacity of the earth to recycle our waste saturated. Our cultural treasury of songs and stories, images and icons, has been looted and copyrighted. Any clever phrase you can think of is already a trademarked slogan. Our very human relationships and abilities have been taken away from us and sold back, so that we are now dependent on strangers, and therefore on money, for things few humans ever paid for until recently: food, shelter, clothing, entertainment, child care, cooking. Life itself has become a consumer item. Today we sell away the last vestiges of our divine bequeathment: our health, the biosphere and genome, even our own minds. This is the process that is culminating in our age. It is almost complete, especially in America and the "developed" world. In the developing world there still remain people who live substantially in gift cultures, where natural and social wealth is not yet the subject of property. Globalization is the process of stripping away these assets, to feed the money machine's insatiable, existential need to grow. Yet this stripmining of other lands is running up against its limits too, both because there is almost nothing left to take, and because of growing pockets of effective resistance.
full article at: http://www.realitysandwich.com/money_and_crisis_civilization
ad, I'm afraid this is the compromise for modernity. Either you can have the awful sold-out world you describe while you live to be 80 and take medicines when you get sick and have food delivered to your doorstep, or you can have a free, pure, untainted world, and die at 50 from a cold that you got in a rainstorm while you were out trying to shoot something for the pot. Sorry, you can't have it both ways. Modernity is shyte, but the alternative is more so.
Sensational garbage! Do you know that Al Gore made up most of the ‘facts’ in his "Inconvenient Truth", yet people like you believe it like its scientifically derived truth. Climate change is a natural phenomenon and global warming is a hoax. There is no factual evidence to suggest otherwise and unless you want to enter the realm of spiritualism and superstition, I suggest that you remember that your statements are mere opinion. At least the ones who predict a property crash base their opinion on facts - even though interpreted wrong, the facts are available.
With gold where it is and our bankrupt government keeping an artificial economy going, I can see how property's 'recovery' can be based on nothing but air. The futile spending of astronomical amounts of money on frivolous government projects is disgusting when you need food, healthcare and employment. But it doesnt mean that deflation is a given or that a house will be worth less next year.
All I know is that in high school we learned that heat releases CO2, not the other way round. Old Al conveniently switched the labels on that fancy graph of his.
Couple of headlines from the scientists in the days when butter was bad for you and margerine was good....from a google news search.
Mar 4, 1970 - The possibility of a new man-made, life-destroying ice age was reported by the Environmental Science Services Administration (ESSA). It quoted Dr. Earl Barrett of the ESSA Research Laboratories, Boulder, Colo., as saying the planet's total environment "is being altered
Sep 24, 1972 - A new Ice Age is creeping over the Northern Hemisphere, and the rest of this century will grow colder and colder, a British expert on climate has claimed.
Mar 2, 1975 - In the last decade, the Arctic ice and snow cap has expanded 12 per cent, and for the first time in this century. ships making for Iceland ports have been impeded by drifting ice
I used to have that view...but I learned it is a modern myth. We need not go back to becoming hunter gatherers as we have more and more technology, why lose it? Modernity requires a means of exchange or money..thats all. The problem is purely usury and interest and the suffering it brings to the earth and its people.
More Charles Eisenstein..
Given the determining role of interest, the first alternative currency system to consider is one that structurally eliminates it. One such system, called Frei Geld or "free-money" was proposed in 1906 by Silvio Gesell in The Natural Economic Order. Gesell's free-money bears a form of negative interest called demurrage. Periodically, a stamp costing a tiny fraction of the currency's denomination must be affixed to it, in effect a "user fee" or a "maintenance cost"; another way to look at it is that the currency "goes bad" – depreciates in value – as it ages. (Of course, today this would be done electronically.)
If this sounds like a radical proposal that could never work, it may surprise you to learn that no less an authority than John Maynard Keynes praised the theoretical soundness of Gesell's ideas (with one critical caveat [1]). What's more, the system was actually tried out with great success, and is again in use today.
The best-known example was instituted in the town of Worgl, Austria, in 1932. To remain valid, each piece of this locally-issued currency required a monthly stamp costing 1% of its face value. This anti-hoarding measure spurred citizens to spend their money quickly, even to pay their taxes early. Instead of generating interest and growing, accumulation of wealth became a burden—much like possessions are a burden to the nomadic hunter-gatherer. Worgl's economy took off; the unemployment rate plummeted even as the rest of the country slipped into a deepening depression; public works were completed, and prosperity continued until the Worgl currency (and hundreds of imitators) were outlawed in 1933 at the behest of a threatened central bank.[2]
Gold does not harmonize with the character of our goods. Gold and straw, gold and petrol, gold and guano, gold and bricks, gold and iron, gold and hides! Only a wild fancy, a monstrous hallucination, only the doctrine of "value" can bridge the gulf. Commodities in general, straw, petrol, guano and the rest can be safely exchanged only when everyone is indifferent as to whether he possesses money or goods, and that is possible only if money is afflicted with all the defects inherent in our products. That is obvious. Our goods rot, decay, break, rust, so only if money has equally disagreeable, loss-involving properties can it effect exchange rapidly, securely and cheaply. For such money can never, on any account, be preferred by anyone to goods.
Only money that goes out of date like a newspaper, rots like potatoes, rusts like iron, evaporates like ether, is capable of standing the test as an instrument for the exchange of potatoes, newspapers, iron and ether. For such money is not preferred to goods either by the purchaser or the seller. We then part with our goods for money only because we need the money as a means of exchange, not because we expect an advantage from possession of the money. [5]
In other words, demurrage redefines money as a medium of exchange instead of being a store of value. No longer is money an exception to the universal tendency in nature toward rust, mold, rot and decay—that is, toward the recycling of resources. No longer does money perpetuate a human realm separate from nature.
Gesell's phrase, "... a monstrous hallucination, the doctrine of 'value'..." hints at another effect of demurrage—it makes us question the notion of “value.” Value assigns to each object in the world a number. It associates an abstraction, changeless and independent, with that which always changes and that exists in relationship to all else. It is part of humanity's descent into representation, the reduction of the world into a data set. Demurrage reverses this thinking and removes an important boundary between the human realm and the natural realm. When money is no longer preferred to goods, we will lose the habit of defining a thing by how much it is worth.
Whereas interest promotes the discounting of future cash flows, demurrage encourages long-term thinking. In present-day accounting, a forest that has the capacity to generate one million dollars a year every year into the foreseeable future is considered more valuable if immediately cut down for a profit of 50 million dollars. (The net present value of the sustainable forest calculated at a discount rate of 5% is only $20 million.) This state of affairs results in the infamously short-sighted behavior of corporations that sacrifice (even their own) long-term well-being for the short-term results of the fiscal quarter. Such behavior is perfectly rational in an interest-based economy, but in a demurrage system, pure self-interest would dictate that the forest be preserved. No longer would greed motivate the robbing of the future for the benefit of the present. The exponential discounting of future cash flows implies the "cashing in" of the entire earth as opposed to an immediate wholesale “liquidation” of our remaining resources.
You're both right when you say GW isn't a proven theory. The problem is that the theory is about the climate of the planet earth and thus it is impossible to conduct experiments on it, nor is there another earth in orbit next door we can turn into a climate lab. All we can do is gather data and make predictions based on interpretation of that data. Damanding 100% verifiable, scientific "proof" is a nice trick that might win you a pub debate but not much else in this context.
Considering that qualified climate scientists that do not believe in man-made GW are in a minority I think going with the bulk of scientific opinion is our best bet. Bet is probably a good way to put it. If we bet GW is a hoax, do nothing and win, we save an estimated US$1 trillion in prevention measures (or about 1/24th of the US bank bailout) If we lose our bet, billions die (including your kids) and civilisation ends.
To make this bet even more stupid is the simple fact that prevention will require us what HAS TO BE DONE ANYWAY within the 5-30 years(depending on who you believe). The move away from fossil fuels is way overdue and just another turd in the shitstorm headed our way.
I've read a bit about the social and psychological phenomenon of apocalypses - a millennial pessimism seems to be hard-wired into us, which is why most cultures have a myth about a spectacularly violent end-of-the-world scenario. I think this trait is seductive to property bears. But bear fodder is like porn. You always need to escalate to keep getting your buzz. So it was inevitable that we'd end up talking about climate change. I just think it's a pity because at best it distracts us from the matter at hand, and at worst drags this blog towards the ragged edge of sensible debate.
You're right. The issue you highlight is something that bugs me most times when i post in CT Bubble. I've just registered zatomorrow.blogspot.com that will cover enviropocalypse, Zimpocalypse, singularity, futurism, SA security, economics, war on terror and war on drugs issues amoung others. Should have a little space there to link to a juicy property collapse related post. First post Dec1. Check it out if bigcockteenaddiction.com is getting stale.
A good point BC although I guess not many Margaret Legum types here eh?
The thing is that if you arent a poor "Zimbo" then you havent experienced a currency collapse for instance. Psychologies of collapses are a luxury for us here in sunny SA where we can chat about our property values declining or not.
Researching demurrage I found some interesting coincidence to the type of buildings created in the periods where this currency was in use.
This currency was used in Egypt for more than a thousand years, until the Romans forcibly replaced it with their own banking and currency system, more "modern" and having positive interest rates. Note the apparent consequences of this change: As long as negative interest currency was used, the Egyptians built monuments that would last forever and maintained their agricultural system in remarkable condition, making it the breadbasket of the Ancient World. All this quickly disappeared when the Roman currency was generalized. Since then, Egypt has remained for two thousand years a "developing" country.
What triggered the exceptional economic and spiritual prosperity in Europe, particularly from 1150 to about 1300, when the extraordinary blossoming of all the cathedrals took place? Few people are aware that this period coincides with the existence of the brakteaten monetary system, under which local lords issued silver plaques that were called back on the average every six to eight months and reissued a bit thinner, amounting to ademurrage rate of about 2-3 percent per month over this entire period. People would therefore automatically invest in anything that would last almost forever: improved land, tapestries, paintings, or cathedrals.
A second wave of foreclosures is poised to hit the market, potentially undermining housing recovery efforts as more homes add to the glut of inventory and drive down prices. These homes largely represent loans that are delinquent but have not yet resulted in foreclosure sales.
About 7 million properties are destined to go into foreclosure, according to a September study by Amherst Securities Group, compared with 1.27 million properties in early 2005.
"There's a huge supply out there," says Dean Baker, co-director of the Center for Economic and Policy Research in Washington, D.C. "The foreclosure process can take a long time. When it comes to (the housing recovery), we're not home free."
There is often a long lag time between a borrower going delinquent and the bank taking the home. Here's why:
•Moratoriums. New state laws imposing short-term moratoriums have slowed the timeline from delinquency to foreclosure.
•Overwhelmed lenders. Banks dealing with a surge in refinancing, mortgage modifications and defaults are overwhelmed with demand, so it can take longer to initiate a foreclosure sale.
•Modifications. Many loans now are first examined to see if they might qualify for a modification. This drags out the timeline and means it is taking longer for homes to go into foreclosure.
•Asset write-downs. Banks may in part be waiting to liquidate homes through foreclosure because they don't want to write down the value of the asset. Lenders can keep homes on the books at a higher value until they are sold at foreclosure.
"There is a lot of foreclosed property in the pipeline that will hit the market and depress prices," says Mark Zandi at Moody's Economy.com. Foreclosed homes often sell at prices below those on the market and can therefore drag down overall home values.
CLOSE TO HOME: Our nationwide look at local real estate markets
The shadow market of foreclosed homes eclipses the number of homes lost this year. Zandi anticipates there will be about 2.4 million homes lost next year through foreclosure, short sales and deeds in lieu of foreclosure. That compares with 2 million homes lost in 2009.
Jumana Bauwens, a spokeswoman at Bank of America, says the bank is projecting an increase in foreclosures in part because customers will not be qualifying for existing loan-modification programs
IT'S JUST A MATTER OF TIME BEFORE WE GET HIT WITH EXACTLY THE SAME SCENARIO HERE IN SA. IT'S GOING TO BE A DISASTER.
Moving away from the climate debate, here's some interesting local stats.
" The report shows that the value of new home loans was only R17.6bn in the second quarter of the year - an incredible 60% down on the R42.6bn for the corresponding period in 2008.
The value of new mortgages declined to such an extent over 12 months that in the second quarter the biggest category of new consumer debt was securitised debt. "
wow, some interesting viewpoints no matter how off the topic it's gone. keep it up, guys. took me a while to realise that GW is global warming and not george W.
27 comments:
This the article bbflames?
House price drop indicates 'double-dip' for property market
Figures from FindaProperty.com reveal that asking prices in Britain have fallen for the first time in seven months
http://www.guardian.co.uk/money/2009/nov/13/house-price-fall-double-dip
Deflation is now kicking in big time it seems. The rest of the world except Russia, India and SA are already in official deflation. The SA CPI seems to be resisting but our PPI is already negative.
A good indicator of where the lagging CPI is heading is the Argus food basket. It had a big drop this week and is now showing annual deflation of 11% . The trend indicates that it could even be food basket deflation of 18% by Christmas.
This has to show up in the CPI. The inflation chart indicates that we are following a downward channel that could take us to minus 2% next year.
With real prices needing to drop 40 to 50% to get us back to the norms and with no inflation to assist that real price fall, all we have left are nominal house price falls.
I really don't see any other alternative.
However, this scenario only addresses the economic risks domestically. Pursuing monetary policy such as that which the Obama administration is promoting can also create significant difficulties in international markets that can ultimately result in another international economic meltdown.
Current U.S. fiscal and monetary policies have produced a tidal wave of financial outflows into foreign stocks and financial markets, and that outflow is intermingling with similar resource flows emanating from every other nation who has also engaged in stimulus-oriented economics.
Granted, this economic outflow has also a stimulated a massive inflow of capital via an accumulation of foreign exchange reserves from international central banks and has financed the ever-growing federal deficits. However, this policy has likewise contributed to a balooning stock market bubble in the U.S. as well as fueling dangerously volatile asset bubbles internationally.
In fact so much of this “funny money” is moving throughout international financial markets that a growing number of foreign banks and international economic policymakers are petitioning the Federal Reserve to curtail its rampant monetization efforts in the interest of stymieing what many fear may be another round of unchecked economic stimulation that may lead to another international economic crisis. Manipulated U.S. currency expansion contributes to price inflation internationally, thereby fueling an ever expanding number of asset bubbles – promoting even more injudicious investments fueled by too much money chasing too few investment opportunities.
Of course, one would think that the Fed chief and other administrative economic advisors would be sensitive to these untoward effects of U.S. fiscal monetization. However, all evidence seems to suggest that the administration is either unaware of such effects or comparatively disinterested.
http://www.naplesnews.com/blogs/veritas-libertas-edward-wimberley/2009/nov/04/bubble/
Are we in an “everything bubble”? That is, are the recent huge rallies in gold, stocks, and most other asset classes in the world mostly mostly attributable to the type of blow-off top action you get when bubbles start to pop?
I don’t know how many bubbles we’re living in right now, or even if we’ve even entered truly bubblicious territory or if we’re just on the way to bubble creating everywhere. I do know this – the Fed/Treasury/White House/Congress have created a bubble in the money supply in this country. Here, look what the Fed/Treasury/White House/Congress are doing to the money supply:
http://blogs.marketwatch.com/cody/2009/11/05/a-couple-ideas-on-how-to-trade-the-money-supply-bubble/
True, I don't know how all this is going to end. There could well be inflation down the line. I can only react to what is happening now and in the near future - and for the the next 2 or 3 years SA it looks like we will have deflation.
If the carry trade collapses and the rand plummets, I guess that will be inflationary.
On the other hand, could we be entering a Japan scenario all over again with long drawn out deflation for years.
ad it was not that one although they seem to be saying the same thing.
CJ do you think we are going to see deflation across the economy? apart from electricity? Motor manufacturers were threatening car price increases a little while ago. Wonder where deflation would leave them in a years time.
The thing is that deflation kills governments through declining tax revenues..they much prefer inflation and where they get to spend the money first (and so getting the greatest purchasing power)before it feeds into the rest of the economy and fuels inflation.
I have begun to have a look at the money supply in SA. Lo and behold in 95 and 96 there was growth of 15 to 20%. It didnt take long for the ANC to turn on the printing presses. Then 7.5% at end-2000 to 17% at end-2001. Much of the inflation we have experienced over the last 14 years can be squarely laid at this governments door. The lack of transparency, reporting and analysis of what the SARB does in this country is shocking. People think that Trevor Manuel is a hero...what bollocks.
Anyhow CJ Just looking at the gold price could mean that investors at least fear inflation...or its just stimulus money looking for an investment...or both.
However looking on the deflationary side:
"WASHINGTON (Reuters) - If the global recession is over, consumers must have missed the memo. High and rising unemployment, low confidence and blown savings have left households in much of the developed world feeling frugal -- and governments scrambling for new ways to tempt them to spend."
All I know is that there are way too many converging trends for this to be just another recession...abstract values no longer make sense and eventually will be rejected...its just a matter of time.
The global inflation push unpacked by George Ure of Urbansurvival.com
http://urbansurvival.com/week.htm
What's really going on under all the environmental ink is that too many people (globally) are waking to the real agenda which is being pushed by the UN, G-20 and all the rest: Global Government.
This is a topic the John Birchers were warning about what? 40-years ago...and here we are with arguably the most socialist government ever to haunt Washington and the John Birch Society was right after all. Far right sometimes, but right is right....
But THE biggest stumbling block to a global coup by the bankster and ruler class has been a lack of money to do their dastardly deed with. But wait! There's movement on your (left) flank as the "UK joins G20 push for Bank Levy".
Main point of this story is the concept of a global bank tax in order to fund future bailouts owned by The Chosen Few. Pass....
The clear and present danger is that some super-organization that's NOT DIRECTLY ELECTED begins to tax everyone in the world. Don't know about you, but I don't remember voting on G20 membership, do you? But that's how the plan's gonna roll, and the great (socializing) of world government needs a funding source and control of the global currency picture.
I'm not trying to sound alarmist at all this, but that's how it's all rolling out: A global synchronized inflation to beggar the working people's of the world.
As a free man, I don't recall anything under the Constitution that provided for the US to contribute to - let alone join - some global government...but it's early yet. Was G20 membership voted on anywhere? I can't recall...
What Gore et al are pushing for (among other items) is carbon credit trading because without monetizing climate control, it's not going to happen. However, given money, or taking it, then anything is possible in the scramble to control the planet. Which, in case you're asleep, is the uber macro picture of what's going on here on Ant Farm Earth.
Remember, from a "power to control" standpoint, the objective is to get a system of global taxation in place which is 'above direct control of the people'. Accomplish that and you smash down the barriers of nationhood and you can install World Government.
Related Data point: Interpol now has its own passport:
"SINGAPORE – INTERPOL today issued its first ever passports which will enable Heads of National Central Bureaus (NCBs) and staff to travel internationally without requiring a visa when assisting in transnational investigations or urgent deployments to incidents.
@ ad
George Ure spends a lot of bandwidth saying Climate Change is a hoax designed to make the "Elites" lots of money.
I'm positive that the "Elites" will make a lot of money and that their activities won't help solve GW one bit but I starting to get pissed off at people that say GW is a hoax by "envirofacists" etc.
Then there are those "elliot wave" stuff he's so into.
I don't know. A lot of what he says is probably true re: the economy and so on but I wouldn't take everything he writes as gospel. One of his main fantasies is getting rid of all the Mexican illegals in the USA, as if that would solve all their problems.
Approach with your sceptics cap.
This whole mess has been a long time comming. It may be wise to start podering...
Proverbs 22:7 The rich ruleth over the poor; And the borrower is servant to the lender.
Revelation 13:17 and that no man should be able to buy or to sell, save he that hath the mark, even the name of the beast or the number of his name
I agree Benny, sceptics hat. I post snippets from both MSM and AltM, it doesnt necessarily mean I agree with everything they say.
George Ure doesnt believe in Global Warming Theory however does believe in Climate Change btw. I share the same view. I also believe in Occam's Razor http://en.wikipedia.org/wiki/Occam%27s_razor
The sun is responsible for 98% of the earths heat while carbon dioxide is a trace gas with a density of 0.04% of the atmosphere. This CO2 is mostly emitted naturally from the oceans and a fraction is man made. You figure it out. Carbon tax or Cap and Trade is nothing but a tax on breathing.
Looking bigger picture here...the world has run out of major economic drivers...computers, internet, cellphones then property all had their turn. As this has either reached saturation or collapsed what is there left? A green bubble...solar, cap and trade, carbon credits, biofuel, massive eco infrastructure etc
Climate Change is a reality but its a natural cycle as with the Maunder Minimum or an ice age. The arrogance of man to say he is causing it and by monetizing it he will make it right is laughable. Personally I worry more about loss of biodiversity due to GM, overfishing and dumping of nuclear waste.
http://www.telegraph.co.uk/earth/energy/6491195/Al-Gore-could-become-worlds-first-carbon-billionaire.html
George Ure, Nouriel Roubini, Gerald Celente et al called the economic collapse a long time before it happened...I am more inclined to believe them and any longwave economist than the likes of Trevor "we can avoid a recession" Manuel or Helicopter Ben
@ ad
"The arrogance of man to say he is causing it"
Hmmm, are we talking avout the same "Man" here who has already domesticated whole continents, drained whole seas, created whole countries out of the sea, diverted 40% of the planets liquid fresh water for his use, chopped down at least 1/3 of the planet's forests and is on track to consume every single last edible fish stock by 2048 (amoung many other impressive and/or horrifying achievements?
You're saying "Man" can't alter the composition of the planet's atmosphere even 4/100 of a % over 200 years?
Fuck off.
Okay maybe "fuck off" is a bit harsh. Sorry. But I if humans are not responsible for the CO2 increase it definately isn't because we didn't have the time and means at our disposal.
Hell, humans have the power to start an Ice Age next week if we set off enough bombs, surely 6billion of us working together can cause a much smaller and more subtle effect over many centuries.
@Benny
We both agree on all things except basically The Greenhouse effect. This is still just a theory and has never been proven. Before I move on please read the following article which will give you a bigger picture on what is happening to the planet at this time (like the Electromagnetic Crisis: read billions of cellphones, satellites, wireless etc)
http://realitysandwich.com/polar_reversals
The reason why this is all pertinent to a property blog is that property values suffer the same malaise of abstract values, greed and the disease of monetizing everything and the unsustainable perpetual growth model. This is what a global tax on carbon and a green bubble is all about...perpetuation of this model, not its solution.
Another article from a different author on Realitysandwich.com... Charles Eisenstein.
The crisis we are facing today arises from the fact there there is almost no more social, cultural, natural, and spiritual capital left to convert into money. Centuries, millennia of near-continuous money creation has left us so destitute that we have nothing left to sell. Our forests are damaged beyond repair, our soil depleted and washed into the sea, our fisheries fished out, the rejuvenating capacity of the earth to recycle our waste saturated. Our cultural treasury of songs and stories, images and icons, has been looted and copyrighted. Any clever phrase you can think of is already a trademarked slogan. Our very human relationships and abilities have been taken away from us and sold back, so that we are now dependent on strangers, and therefore on money, for things few humans ever paid for until recently: food, shelter, clothing, entertainment, child care, cooking. Life itself has become a consumer item. Today we sell away the last vestiges of our divine bequeathment: our health, the biosphere and genome, even our own minds. This is the process that is culminating in our age. It is almost complete, especially in America and the "developed" world. In the developing world there still remain people who live substantially in gift cultures, where natural and social wealth is not yet the subject of property. Globalization is the process of stripping away these assets, to feed the money machine's insatiable, existential need to grow. Yet this stripmining of other lands is running up against its limits too, both because there is almost nothing left to take, and because of growing pockets of effective resistance.
full article at:
http://www.realitysandwich.com/money_and_crisis_civilization
ad, I'm afraid this is the compromise for modernity. Either you can have the awful sold-out world you describe while you live to be 80 and take medicines when you get sick and have food delivered to your doorstep, or you can have a free, pure, untainted world, and die at 50 from a cold that you got in a rainstorm while you were out trying to shoot something for the pot. Sorry, you can't have it both ways. Modernity is shyte, but the alternative is more so.
@ Benny
Sensational garbage! Do you know that Al Gore made up most of the ‘facts’ in his "Inconvenient Truth", yet people like you believe it like its scientifically derived truth. Climate change is a natural phenomenon and global warming is a hoax. There is no factual evidence to suggest otherwise and unless you want to enter the realm of spiritualism and superstition, I suggest that you remember that your statements are mere opinion.
At least the ones who predict a property crash base their opinion on facts - even though interpreted wrong, the facts are available.
With gold where it is and our bankrupt government keeping an artificial economy going, I can see how property's 'recovery' can be based on nothing but air. The futile spending of astronomical amounts of money on frivolous government projects is disgusting when you need food, healthcare and employment. But it doesnt mean that deflation is a given or that a house will be worth less next year.
@Benny
All I know is that in high school we learned that heat releases CO2, not the other way round. Old Al conveniently switched the labels on that fancy graph of his.
Couple of headlines from the scientists in the days when butter was bad for you and margerine was good....from a google news search.
Mar 4, 1970 - The possibility of a new man-made, life-destroying ice age was reported by the Environmental Science Services Administration (ESSA). It quoted Dr. Earl Barrett of the ESSA Research Laboratories, Boulder, Colo., as saying the planet's total environment "is being altered
Sep 24, 1972 - A new Ice Age is creeping over the Northern Hemisphere, and the rest of this century will grow colder and colder, a British expert on climate has claimed.
Mar 2, 1975 - In the last decade, the Arctic ice and snow cap has expanded 12 per cent, and for the first time in this century. ships making for Iceland ports have been impeded by drifting ice
@BC
I used to have that view...but I learned it is a modern myth. We need not go back to becoming hunter gatherers as we have more and more technology, why lose it? Modernity requires a means of exchange or money..thats all. The problem is purely usury and interest and the suffering it brings to the earth and its people.
More Charles Eisenstein..
Given the determining role of interest, the first alternative currency system to consider is one that structurally eliminates it. One such system, called Frei Geld or "free-money" was proposed in 1906 by Silvio Gesell in The Natural Economic Order. Gesell's free-money bears a form of negative interest called demurrage. Periodically, a stamp costing a tiny fraction of the currency's denomination must be affixed to it, in effect a "user fee" or a "maintenance cost"; another way to look at it is that the currency "goes bad" – depreciates in value – as it ages. (Of course, today this would be done electronically.)
If this sounds like a radical proposal that could never work, it may surprise you to learn that no less an authority than John Maynard Keynes praised the theoretical soundness of Gesell's ideas (with one critical caveat [1]). What's more, the system was actually tried out with great success, and is again in use today.
The best-known example was instituted in the town of Worgl, Austria, in 1932. To remain valid, each piece of this locally-issued currency required a monthly stamp costing 1% of its face value. This anti-hoarding measure spurred citizens to spend their money quickly, even to pay their taxes early. Instead of generating interest and growing, accumulation of wealth became a burden—much like possessions are a burden to the nomadic hunter-gatherer. Worgl's economy took off; the unemployment rate plummeted even as the rest of the country slipped into a deepening depression; public works were completed, and prosperity continued until the Worgl currency (and hundreds of imitators) were outlawed in 1933 at the behest of a threatened central bank.[2]
http://www.realitysandwich.com/money_a_new_beginning_part_2
and for the first part of the series http://www.realitysandwich.com/money_a_new_beginning
Gold does not harmonize with the character of our goods. Gold and straw, gold and petrol, gold and guano, gold and bricks, gold and iron, gold and hides! Only a wild fancy, a monstrous hallucination, only the doctrine of "value" can bridge the gulf. Commodities in general, straw, petrol, guano and the rest can be safely exchanged only when everyone is indifferent as to whether he possesses money or goods, and that is possible only if money is afflicted with all the defects inherent in our products. That is obvious. Our goods rot, decay, break, rust, so only if money has equally disagreeable, loss-involving properties can it effect exchange rapidly, securely and cheaply. For such money can never, on any account, be preferred by anyone to goods.
Only money that goes out of date like a newspaper, rots like potatoes, rusts like iron, evaporates like ether, is capable of standing the test as an instrument for the exchange of potatoes, newspapers, iron and ether. For such money is not preferred to goods either by the purchaser or the seller. We then part with our goods for money only because we need the money as a means of exchange, not because we expect an advantage from possession of the money. [5]
In other words, demurrage redefines money as a medium of exchange instead of being a store of value. No longer is money an exception to the universal tendency in nature toward rust, mold, rot and decay—that is, toward the recycling of resources. No longer does money perpetuate a human realm separate from nature.
Gesell's phrase, "... a monstrous hallucination, the doctrine of 'value'..." hints at another effect of demurrage—it makes us question the notion of “value.” Value assigns to each object in the world a number. It associates an abstraction, changeless and independent, with that which always changes and that exists in relationship to all else. It is part of humanity's descent into representation, the reduction of the world into a data set. Demurrage reverses this thinking and removes an important boundary between the human realm and the natural realm. When money is no longer preferred to goods, we will lose the habit of defining a thing by how much it is worth.
Whereas interest promotes the discounting of future cash flows, demurrage encourages long-term thinking. In present-day accounting, a forest that has the capacity to generate one million dollars a year every year into the foreseeable future is considered more valuable if immediately cut down for a profit of 50 million dollars. (The net present value of the sustainable forest calculated at a discount rate of 5% is only $20 million.) This state of affairs results in the infamously short-sighted behavior of corporations that sacrifice (even their own) long-term well-being for the short-term results of the fiscal quarter. Such behavior is perfectly rational in an interest-based economy, but in a demurrage system, pure self-interest would dictate that the forest be preserved. No longer would greed motivate the robbing of the future for the benefit of the present. The exponential discounting of future cash flows implies the "cashing in" of the entire earth as opposed to an immediate wholesale “liquidation” of our remaining resources.
http://www.realitysandwich.com/money_a_new_beginning_part_2
@ Peter, ad
You're both right when you say GW isn't a proven theory. The problem is that the theory is about the climate of the planet earth and thus it is impossible to conduct experiments on it, nor is there another earth in orbit next door we can turn into a climate lab. All we can do is gather data and make predictions based on interpretation of that data. Damanding 100% verifiable, scientific "proof" is a nice trick that might win you a pub debate but not much else in this context.
Considering that qualified climate scientists that do not believe in man-made GW are in a minority I think going with the bulk of scientific opinion is our best bet.
Bet is probably a good way to put it.
If we bet GW is a hoax, do nothing and win, we save an estimated US$1 trillion in prevention measures (or about 1/24th of the US bank bailout)
If we lose our bet, billions die (including your kids) and civilisation ends.
To make this bet even more stupid is the simple fact that prevention will require us what HAS TO BE DONE ANYWAY within the 5-30 years(depending on who you believe). The move away from fossil fuels is way overdue and just another turd in the shitstorm headed our way.
I've read a bit about the social and psychological phenomenon of apocalypses - a millennial pessimism seems to be hard-wired into us, which is why most cultures have a myth about a spectacularly violent end-of-the-world scenario. I think this trait is seductive to property bears. But bear fodder is like porn. You always need to escalate to keep getting your buzz. So it was inevitable that we'd end up talking about climate change. I just think it's a pity because at best it distracts us from the matter at hand, and at worst drags this blog towards the ragged edge of sensible debate.
@ Beancounter
You're right. The issue you highlight is something that bugs me most times when i post in CT Bubble.
I've just registered zatomorrow.blogspot.com that will cover enviropocalypse, Zimpocalypse, singularity, futurism, SA security, economics, war on terror and war on drugs issues amoung others. Should have a little space there to link to a juicy property collapse related post.
First post Dec1. Check it out if bigcockteenaddiction.com is getting stale.
CJ, please explain this regarding your view on delfation:
http://www.marketoracle.co.uk/Article15131.html
A good point BC although I guess not many Margaret Legum types here eh?
The thing is that if you arent a poor "Zimbo" then you havent experienced a currency collapse for instance. Psychologies of collapses are a luxury for us here in sunny SA where we can chat about our property values declining or not.
Researching demurrage I found some interesting coincidence to the type of buildings created in the periods where this currency was in use.
This currency was used in Egypt for more than a thousand years, until the Romans forcibly replaced it with their own banking and currency system, more "modern" and having positive interest rates. Note the apparent consequences of this change: As long as negative interest currency was used, the Egyptians built monuments that would last forever and maintained their agricultural system in remarkable condition, making it the breadbasket of the Ancient World. All this quickly disappeared when the Roman currency was generalized. Since then, Egypt has remained for two thousand years a "developing" country.
What triggered the exceptional economic and spiritual prosperity in Europe, particularly from 1150 to about 1300, when the extraordinary blossoming of all the cathedrals took place? Few people are aware that this period coincides with the existence of the brakteaten monetary system, under which local lords issued silver plaques that were called back on the average every six to eight months and reissued a bit thinner, amounting to ademurrage rate of about 2-3 percent per month over this entire period. People would therefore automatically invest in anything that would last almost forever: improved land, tapestries, paintings, or cathedrals.
http://www.thesharehood.org/demurrage
Another wave of foreclosures looms
By Stephanie Armour, USA TODAY.
A second wave of foreclosures is poised to hit the market, potentially undermining housing recovery efforts as more homes add to the glut of inventory and drive down prices.
These homes largely represent loans that are delinquent but have not yet resulted in foreclosure sales.
About 7 million properties are destined to go into foreclosure, according to a September study by Amherst Securities Group, compared with 1.27 million properties in early 2005.
"There's a huge supply out there," says Dean Baker, co-director of the Center for Economic and Policy Research in Washington, D.C. "The foreclosure process can take a long time. When it comes to (the housing recovery), we're not home free."
There is often a long lag time between a borrower going delinquent and the bank taking the home. Here's why:
•Moratoriums. New state laws imposing short-term moratoriums have slowed the timeline from delinquency to foreclosure.
•Overwhelmed lenders. Banks dealing with a surge in refinancing, mortgage modifications and defaults are overwhelmed with demand, so it can take longer to initiate a foreclosure sale.
•Modifications. Many loans now are first examined to see if they might qualify for a modification. This drags out the timeline and means it is taking longer for homes to go into foreclosure.
•Asset write-downs. Banks may in part be waiting to liquidate homes through foreclosure because they don't want to write down the value of the asset. Lenders can keep homes on the books at a higher value until they are sold at foreclosure.
"There is a lot of foreclosed property in the pipeline that will hit the market and depress prices," says Mark Zandi at Moody's Economy.com. Foreclosed homes often sell at prices below those on the market and can therefore drag down overall home values.
CLOSE TO HOME: Our nationwide look at local real estate markets
The shadow market of foreclosed homes eclipses the number of homes lost this year. Zandi anticipates there will be about 2.4 million homes lost next year through foreclosure, short sales and deeds in lieu of foreclosure. That compares with 2 million homes lost in 2009.
Jumana Bauwens, a spokeswoman at Bank of America, says the bank is projecting an increase in foreclosures in part because customers will not be qualifying for existing loan-modification programs
IT'S JUST A MATTER OF TIME BEFORE WE GET HIT WITH EXACTLY THE SAME SCENARIO HERE IN SA.
IT'S GOING TO BE A DISASTER.
Moving away from the climate debate, here's some interesting local stats.
"
The report shows that the value of new home loans was only R17.6bn in the second quarter of the year - an incredible 60% down on the R42.6bn for the corresponding period in 2008.
The value of new mortgages declined to such an extent over 12 months that in the second quarter the biggest category of new consumer debt was securitised debt.
"
http://www.fin24.com/articles/default/display_article.aspx?ArticleId=1518-25_2562069
I don't see these numbers improving any time soon.
wow, some interesting viewpoints no matter how off the topic it's gone. keep it up, guys. took me a while to realise that GW is global warming and not george W.
silly silly!
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