Financial Crisis

[cloudhopper]

The amount of inflation/devaluation required to deal with all the debts (debts which are still growing and growing and growing) will be the "currency catastrophe" Mises talks of. The fact that its global changes nothing other than the magnitude of what is coming. No where to run. Other than gold (i agree with that prediction laid out in the vid link on the gold thread)

What if all the debt is not inflated away and simply defaulted on? Then there will be nowhere to run but physical cash.

[Naam]

The amount of inflation/devaluation required to deal with all the debts (debts which are still growing and growing and growing) will be the "currency catastrophe" Mises talks of. The fact that its global changes nothing other than the magnitude of what is coming. No where to run. Other than gold (i agree with that prediction laid out in the vid link on the gold thread)

What if all the debt is not inflated away and simply defaulted on? Then there will be nowhere to run but physical cash.

parallel with the default physical cash can be "defaulted" on too. i experienced that in april 1984 in Nigeria when overnight the value all physical cash was declared zero and only "resonable" cash amounts could be exchanged for new notes.

by the way, the new notes were printed with the same plates but with different colours.

[cloudhopper]

The amount of inflation/devaluation required to deal with all the debts (debts which are still growing and growing and growing) will be the "currency catastrophe" Mises talks of. The fact that its global changes nothing other than the magnitude of what is coming. No where to run. Other than gold (i agree with that prediction laid out in the vid link on the gold thread)

What if all the debt is not inflated away and simply defaulted on? Then there will be nowhere to run but physical cash.

parallel with the default physical cash can be "defaulted" on too. i experienced that in april 1984 in Nigeria when overnight the value all physical cash was declared zero and only "resonable" cash amounts could be exchanged for new notes.

by the way, the new notes were printed with the same plates but with different colours.

It would be very interesting to hear whatever else you might recall - that could happen again. The endless war on drugs or terror you know. Was this event preceded by a hyper-inflation? How would a Nigerian who had been accumulating gold or cash in a bank account have done in the long run vs. currency hoarding in this event? (Assuming no other options like you must have had e.g. another accepted currency).

[mania]

parallel with the default physical cash can be "defaulted" on too.

Same not long ago albeit in N Korea

North Korea revalues currency, destroying personal savings

[Naam]

The amount of inflation/devaluation required to deal with all the debts (debts which are still growing and growing and growing) will be the "currency catastrophe" Mises talks of. The fact that its global changes nothing other than the magnitude of what is coming. No where to run. Other than gold (i agree with that prediction laid out in the vid link on the gold thread)

What if all the debt is not inflated away and simply defaulted on? Then there will be nowhere to run but physical cash.

parallel with the default physical cash can be "defaulted" on too. i experienced that in april 1984 in Nigeria when overnight the value all physical cash was declared zero and only "resonable" cash amounts could be exchanged for new notes.

by the way, the new notes were printed with the same plates but with different colours.

It would be very interesting to hear whatever else you might recall - that could happen again. The endless war on drugs or terror you know. Was this event preceded by a hyper-inflation? How would a Nigerian who had been accumulating gold or cash in a bank account have done in the long run vs. currency hoarding in this event? (Assuming no other options like you must have had e.g. another accepted currency).

it was not a matter of hyper-inflation (which at that time ran about 10-12% p.a.) but a matter of unbelievable huge corruption by the members of the civilian government (after 14 years of military junta rule) on federal and state level... actually on any level even the private industry. nothing moved without cash! but with enough cash one could move mountains. and the cash that changed hands was of course not kept in the banks where it would have raised suspicion.

cash domestic currency could be easily exchanged at a discount of 30% into Dollars or Pound Sterling, a system which was mainly used by expatriates after they experienced several times the cheques issued by the Central Bank of Nigeria (!) bouncing.

[manarak]

How about this quote from the Austrian Ludwig von Mises ,

"There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crises should come to an end sooner as a result of voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved". ?

yes, during von Mises time, the markets would be concurrential and the inflation/devaluation mechanism would work to adjust the currency's value internationally, resulting in crises or catastrophies.

Today, we have a much different reality of the major world economies hit by the same crisis, meaning they behave much more similarly to a keynesian single world currency, i.e. inflating or devaluating at a similar rate around the globe. This is what will prevent the explosion of the crisis and this is also what will in the end finance it. By inflating and devaluating, the debt holdings lose their value, and at the end currency holders and workers will pay the bill.

The amount of inflation/devaluation required to deal with all the debts (debts which are still growing and growing and growing) will be the "currency catastrophe" Mises talks of. The fact that its global changes nothing other than the magnitude of what is coming. No where to run. Other than gold (i agree with that prediction laid out in the vid link on the gold thread)

If you are talking about a "currency catastrophe" that takes 20 years to "explode", yes, this will be the currency catastrophy.

BUT...

Inflation and devaluation are not required to be high enough to cancel out all the debts!

The yearly combined inflation and devaluation rate simply needs to be higher than the interest rate on the debt, then the debt is neutralized and doesn't cost anything anymore or even becomes a running profit!

There won't be any sudden currency shock.

It will be slow and gentle and wage earners and land/house owners will be squeezed by tax until the last drop.

Edited October 22, 2012 by manarak

[mccw]

How about this quote from the Austrian Ludwig von Mises ,

"There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crises should come to an end sooner as a result of voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved". ?

yes, during von Mises time, the markets would be concurrential and the inflation/devaluation mechanism would work to adjust the currency's value internationally, resulting in crises or catastrophies.

Today, we have a much different reality of the major world economies hit by the same crisis, meaning they behave much more similarly to a keynesian single world currency, i.e. inflating or devaluating at a similar rate around the globe. This is what will prevent the explosion of the crisis and this is also what will in the end finance it. By inflating and devaluating, the debt holdings lose their value, and at the end currency holders and workers will pay the bill.

The amount of inflation/devaluation required to deal with all the debts (debts which are still growing and growing and growing) will be the "currency catastrophe" Mises talks of. The fact that its global changes nothing other than the magnitude of what is coming. No where to run. Other than gold (i agree with that prediction laid out in the vid link on the gold thread)

If you are talking about a "currency catastrophe" that takes 20 years to "explode", yes, this will be the currency catastrophy.

BUT...

Inflation and devaluation are not required to be high enough to cancel out all the debts!

The yearly combined inflation and devaluation rate simply needs to be higher than the interest rate on the debt, then the debt is neutralized and doesn't cost anything anymore or even becomes a running profit!

There won't be any sudden currency shock.

It will be slow and gentle and wage earners and land/house owners will be squeezed by tax until the last drop.

You could be right. Or it could be much quicker. Either way it will not be a case of back to business as normal pre 08. Steady stagflation is really the best case scenario I'm hoping for, but the risks of major shocks are such I have taken steps to get through them.

I just finished reading the "crash course", thanks who ever put the link up, and so thinking to the future 10, 20, 40 years and further. The ideas of the three levels of wealth, basically the energy, ore or farm as the first, the developed product derived from the first is the second, and the third is a paper or electronic claim on some of the first or second forms. Next year we intend to secure ourselves a stable source of the primary kind, ie good quality farm land and water resources.

Has anyone else here read it?

[manarak]

I just finished reading the "crash course", thanks who ever put the link up, and so thinking to the future 10, 20, 40 years and further. The ideas of the three levels of wealth, basically the energy, ore or farm as the first, the developed product derived from the first is the second, and the third is a paper or electronic claim on some of the first or second forms. Next year we intend to secure ourselves a stable source of the primary kind, ie good quality farm land and water resources.

Has anyone else here read it?

no, but it does make perfect sense to buy farm land and primary resources - provided you can defend your property against government's tax greed.

gold isn't much different - it is a primary resource, but it is more easily concealable and transferrable than farm land.

[mccw]

On the doing something about weather we could all learn from the Thai King, not his rain making, but in his "sustainable economy" theory. This is fundamentally what the country and the world must adopt sooner or later.

This makes much more sense than your earlier posts!

I too appreciate many aspects of the HM's economic model.

Sustainability/ sufficiency economy is what we as a species should be doing. However seeing how our whole system is designed I think most of my seemingly more nonsensical future prophecies are probably far more likely to come to pass / be attempted with terribly wasteful long term consequences. We should but almost certainly wont just face reality, and deal with the fact that we are living on a planet with finite resources, until nature forces it in to our collective consciousness the severity of our predicament.

[mccw]

I just finished reading the "crash course", thanks who ever put the link up, and so thinking to the future 10, 20, 40 years and further. The ideas of the three levels of wealth, basically the energy, ore or farm as the first, the developed product derived from the first is the second, and the third is a paper or electronic claim on some of the first or second forms. Next year we intend to secure ourselves a stable source of the primary kind, ie good quality farm land and water resources.

Has anyone else here read it?

no, but it does make perfect sense to buy farm land and primary resources - provided you can defend your property against government's tax greed.

gold isn't much different - it is a primary resource, but it is more easily concealable and transferrable than farm land.

Gold is a good store of wealth but the problem is it can't grow.

I was originally going to rely of my high yield but high leg work property business and keep gold as a reserve to get through any major turmoil.

But looking to the far longer outlook now I'm thinking, although hardly worth the bother from a returns perspective right now, that enough farm land for family self sufficiency with a healthy surplus would be prudent. 5 to 10 rai maybe 20rai. Fortified compound with solar energy and water resource. I hope there is the stagflation route and I have time to set all this up + make the money here in UK first.

Check that book out. It lays out scientific facts speaking for themselves, not just some doom and gloom profiteer like some would try to dismiss the entire topic as.

Edited October 22, 2012 by mccw

[cloudhopper]

I just finished reading the "crash course", thanks who ever put the link up, and so thinking to the future 10, 20, 40 years and further. The ideas of the three levels of wealth, basically the energy, ore or farm as the first, the developed product derived from the first is the second, and the third is a paper or electronic claim on some of the first or second forms. Next year we intend to secure ourselves a stable source of the primary kind, ie good quality farm land and water resources.

Has anyone else here read it?

Yes many times and highly recommend it. There are many small communities forming around those ideas, and we have one up here in Pai. We irrigate our land with gravity-powered water and fertilize it with locally produced organic materials. Farmland and other sustainable natural resources should have been at the apex of Exter's pyramid IMO. Unlike the US, no tax on land or government minders cracking down on raising a few of your own chickens in LOS, at least so far.....

[JSixpack]

. . . enough farm land for family self sufficiency with a healthy surplus would be prudent. 5 to 10 rai maybe 20rai. Fortified compound with solar energy and water resource.

Great for the Thai family. Now we need to consider what you'll do for own self-sufficiency using assets that you own.

[cloudhopper]

. . . enough farm land for family self sufficiency with a healthy surplus would be prudent. 5 to 10 rai maybe 20rai. Fortified compound with solar energy and water resource.

Great for the Thai family. Now we need to consider what you'll do for own self-sufficiency using assets that you own.

I don't really think that's an issue here even for people not related to a Thai national. Leasing for 30 years, usufructing or owning via a company can safely achieve the objective.

[manarak]

Park wealth in land / super cheap or super expensive real estate / gold and for the rest, buy low sell high.

That strategy should be good enough.

[Naam]

. . . enough farm land for family self sufficiency with a healthy surplus would be prudent. 5 to 10 rai maybe 20rai. Fortified compound with solar energy and water resource.

Great for the Thai family. Now we need to consider what you'll do for own self-sufficiency using assets that you own.

I don't really think that's an issue here even for people not related to a Thai national. Leasing for 30 years, usufructing or owning via a company can safely achieve the objective.

agricultural land + Farang = no-no!

[Naam]

Park wealth in land / super cheap or super expensive real estate / gold and for the rest, buy low sell high.

That strategy should be good enough.

most people don't face the problem where to park wealth... they don't have any wealth to park.

[manarak]

most people don't face the problem where to park wealth... they don't have any wealth to park.

true, so true...

5555

[cloudhopper]

agricultural land + Farang = no-no!

Ah, so that's why I get those nut-squeezing sensations when I stroll around the orchard!

[midas]

Hey yoshiwara look !

Even The Bank of England's deputy governor is a “ doom and gloomer “ because he also

thinks there are "end-of-the-world risks"

http://www.telegraph...r-UK-banks.html

Edited October 23, 2012 by midas

[yoshiwara]

Hey yoshiwara look !

Even The Bank of England's deputy governor is a “ doom and gloomer “ because he also

thinks there are "end-of-the-world risks"

http://www.telegraph...r-UK-banks.html

Please don't distract me. I am right now watching Marc Faber on CNBC. I didn't realise he had a mini pony-tail. A very bad marker IMHO.

[LaoPo]

Hey yoshiwara look !

Even The Bank of England's deputy governor is a “ doom and gloomer “ because he also

thinks there are "end-of-the-world risks"

http://www.telegraph...r-UK-banks.html

Please don't distract me. I am right now watching Marc Faber on CNBC. I didn't realise he had a mini pony-tail. A very bad marker IMHO.

"Mini pony-tail..." ?

Geniuses, eccentric -financial- geniuses, lunatics and weirdos all have one thing in common; they are different than other human beings.

And the ones, amongst the afore mentioned, who are wealthy have no problem in exposing themselves in a different way from common people and the ones who are greedy about their money (read: bankers, investment gurus and other legalized criminals and -criminal institutions) accept they are different...and also accept the ones with a mini pony tail, beautiful Thai spouse and a magnificent estate* in Chiang Mai...

* http://www.gloomboomdoom.com/public/pSTD.cfm?pageSPS_ID=5200

[yoshiwara]

Hey yoshiwara look !

Even The Bank of England's deputy governor is a “ doom and gloomer “ because he also

thinks there are "end-of-the-world risks"

http://www.telegraph...r-UK-banks.html

Please don't distract me. I am right now watching Marc Faber on CNBC. I didn't realise he had a mini pony-tail. A very bad marker IMHO.

"Mini pony-tail..." ?

Geniuses, eccentric -financial- geniuses, lunatics and weirdos all have one thing in common; they are different than other human beings.

And the ones, amongst the afore mentioned, who are wealthy have no problem in exposing themselves in a different way from common people and the ones who are greedy about their money (read: bankers, investment gurus and other legalized criminals and -criminal institutions) accept they are different...and also accept the ones with a mini pony tail, beautiful Thai spouse and a magnificent estate* in Chiang Mai...

* http://www.gloomboom...pageSPS_ID=5200

A noble defence, but geezers wearing ponytails are just not acceptable. You will be pleased to know that Marc was dabbling in the Greek equity market this year.

[cheeryble]

"magnificent Thai estate"?

Haha!

.....that's poetic license and hyperbole taken for a walk!

I went down a little soi in a not very well to do area near, not on, the east side of the river a few years ago and there it was, a larger than average building amongst a load of typical non-impressive housing.

Edited October 24, 2012 by cheeryble

[manarak]

"magnificent Thai estate"?

Haha!

.....that's poetic license and hyperbole taken for a walk!

I went down a little soi in a not very well to do area near, not on, the east side of the river a few years ago and there it was, a larger than average building amongst a load of typical non-impressive housing.

that was the building housing the security guards... 555

[mccw]

. . . enough farm land for family self sufficiency with a healthy surplus would be prudent. 5 to 10 rai maybe 20rai. Fortified compound with solar energy and water resource.

Great for the Thai family. Now we need to consider what you'll do for own self-sufficiency using assets that you own.

I don't really think that's an issue here even for people not related to a Thai national. Leasing for 30 years, usufructing or owning via a company can safely achieve the objective.

agricultural land + Farang = no-no!

I guess no one told this guy:

[ajarnpot]

Hey yoshiwara look !

Even The Bank of England's deputy governor is a “ doom and gloomer “ because he also

thinks there are "end-of-the-world risks"

http://www.telegraph...r-UK-banks.html

Please don't distract me. I am right now watching Marc Faber on CNBC. I didn't realise he had a mini pony-tail. A very bad marker IMHO.

"Mini pony-tail..." ?

Geniuses, eccentric -financial- geniuses, lunatics and weirdos all have one thing in common; they are different than other human beings.

And the ones, amongst the afore mentioned, who are wealthy have no problem in exposing themselves in a different way from common people and the ones who are greedy about their money (read: bankers, investment gurus and other legalized criminals and -criminal institutions) accept they are different...and also accept the ones with a mini pony tail, beautiful Thai spouse and a magnificent estate* in Chiang Mai...

* http://www.gloomboom...pageSPS_ID=5200

A noble defence, but geezers wearing ponytails are just not acceptable. You will be pleased to know that Marc was dabbling in the Greek equity market this year.

This is in fact an important discovery, correlation between common/good sense and mini (or any) ponytail on men? I think in fact one only need look to the greatest financial guru of them all Steven Seagal

[midas]

mccw as property is your field of activity I have read a few articles recently about the subject of interest only loans in the United Kingdom with some referring to the problem as a ticking time bomb.

The way I read it from all the way here in Thailand is that it sounds like the UK property market could effectively freeze up at some point in the future when huge numbers of people simultaneously put their homes on the market?

Have people been lied to again about the prospects of capital gains making it all worthwhile to buy a house on an interest only loan?

http://www.ftadviser.com/2012/10/25/regulation/regulators/mmr-fsa-delays-interest-only-decision-as-review-launched-wujOxkrQimZh1YUWAISu4H/article.html?ftar=true

[Naam]

The way I read it from all the way here in Thailand is that it sounds like the UK property market could effectively freeze up at some point in the future when huge numbers of people simultaneously put their homes on the market?

and live in tents?

[midas]

The way I read it from all the way here in Thailand is that it sounds like the UK property market could effectively freeze up at some point in the future when huge numbers of people simultaneously put their homes on the market?

and live in tents?

I don't think the financiers would care where they live

in the UK More than 50 per cent of mortgages handed out at the peak of the market in 2007 and 2008 were granted without the lender asking for any proof about how much a person earned.

Up with the to 45 per cent of borrowers who have taken out a loan over the past seven years are ‘mortgage prisoners’, which means they may not be able to remortgage to a better deal or to move house.

Nearly one in two households with a mortgage taken out between 2005 and 2010 have ‘no money left or had a shortfall’ after paying their mortgage and their bills. The FSA’s report said they have to raid savings or go into debt to keep afloat.

The number of homeowners who have fallen behind with their monthly mortgage payments ‘could be as high as 9.7 per cent’.

Over the past five years, half of all mortgage lending ‘was not used to buy houses’, but for people to remortgage, or to borrow more on their mortgage to ‘support their lifestyle, to pay for home improvements or to consolidate debts’.

[Naam]

The way I read it from all the way here in Thailand is that it sounds like the UK property market could effectively freeze up at some point in the future when huge numbers of people simultaneously put their homes on the market?

and live in tents?

I don't think the financiers would care where they live

i don't think the financiers are brain-amputated and neither will nor are able to force huge numbers of people to put their homes simultaneously on the market thus collapsing their balance sheets due to huge losses on collateral and being closed down by the regulator.

next interesting theory please...