- rockyracoon wrote:
- Squire, I tend to agree with you but something isn't just quite right and the markets are reflecting (stock markets for all the ballyhoo about their forward pricing sagacity, are often as not just as reactionary) the growing uncertainty between long term credit destruction and short term stimulus. Youngdan has a far better grasp of how the Fed and others are injecting 100's of billions into the system and where this money is coming from and ultimately resting.
I gladly defer to YoungDan on such matters. Right now I am more interested in trying to convey what this actually means to a business trying to make decisions. My interests are prosaic and practical, but with this sort of backdrop sane business decisions, are proving well nigh impossible. If I am typical of many many others that is a major recessionary trend. Money not used is dead money. (Isn't there is some Biblical tale of a son who sits on his money and gets told off?)
Stock markets IMO have all the sagacity of a herd of wildebeest that have scented water. Herd instinct rules.
I anticipated the interest rate cut today and (with others) thought it may have been more, but agree they are trying desperately to stimulate now and all the BOE and ECB remits are out the window. It is like trying to put off the day of reckoning. That said from what I have seen recently (involvement in loan defaults) interest rate cuts will help a lot of people who are on the margins now, but further down the line is another matter. They need to reduce debt, if not by interest rates then they need to devise other means. I don't care how they do it but it must happen. As for western currency, they are over valued.
What strikes me as being so absurd is there are funds sitting. Trillions of dollars, but no one will move because they could well lose their shirt.
Yesterday I was at a meeting that, including prep., and considered weighing up after, went on from 8 am to 10 pm. Basically grinding through our options scheme by scheme, proposal by proposal. There was not a lot of optimism, not any.
Key to property is buying the site at a price that allows you to make a profit after construction. What became clear was that none of us can predict with any certainty the future value of property or rentals anywhere. Site values may plummet in the coming year, but there again will people be willing to sell at greatly reduced prices? Supply and demand, but with a serious final cost consequence.
I think they were perhaps over doing the gloom as what struck me as odd is that many had strong views on potential land values and sounded off, without considering that doing nothing also has risk. We can guess based on reasonable assumptions of a recession, but if this turns severe we end up with money tied up in sites that may sit undeveloped for a decade. Even if there is a need for housing, or whatever, there may not be the financial reason to construct. So what do you do but hold monthly reviews. More unproductive time. Each month that we sit means that thousands or jobs are not created. That is just one group of businesses and I am sure that this is being repeated over and over.
Not many considered that holding the currency in their pocket may prove less reliable than a land bank. My view was to aim towards buying sites which had potential, but which needed redevelopment. Sites that have a good and stable rental income. Invest in the boring. Secures some income. The time for some of us to break ranks may be approaching.
- rockyracoon wrote:
- Given the markets' decline today and over the last several days, one has to feel that even the big boys and girls in the unit, hedge and sovereign funds are bailing out of the markets. I'm personally committed to stay out of the markets until I see a quantifiable return to "normalacy" and then a bit more. Yet, I can see some lovely bargains lying around the market floors.
Hedge fund managers are watching, that is a definite, profit is their mantra. God only knows what Sovereign funds are doing. They tend to have long term objectives. They could enter the market, take a loss and wait. Equally they could have motive in staying out.
- rockyracoon wrote:
- In the "real" world there are many viable businesses that will need access for day-to-day funding facilities and this is where everyone's attention is focused. I'm not talking about grand building projects but on payrolls and stocking inventory.
Everyone is cutting back, reducing stock, staff etc. Those that don't go to the wall. It can become a trend that feeds on itself and becomes uncontrollable. Strict monitory types may well criticise governments, but the problem with purists is often lack of balance, inflexibility and myopia.
- rockyracoon wrote:
- Every Western govt, it seems, is scrambling to gather enough cash to inject into the credit pipe line. They are borrowing these funds. From who? I'm tending to believe that they are letting the printing presses slide a little which is evidenced by some commodity price increases.
Agree.
- rockyracoon wrote:
- Hell, the "experts" in govts have called this all wrong, and at this point I wonder if anyone really has a grasp on the entire situation. The ad hoc national approach in Europe tends to confirm the suspicions that there is no short-term or long-term grasp on the situation. gl
Governments were not paying a lot of attention to what experts were telling them. I am sure that some in the BOE and the UK Treasury (to take an example) were airing some alarming views. However what politician is going to leap in and end a spending binge, especially if it is one that increases tax revenue? Even now just listen to the two moppets the Democrats and Republicans have served up, spend, spend, spend. Politicians seem to be genetically predisposed to spending plans and averse to delivering bad news. I am not so sure that the current political structures serve us well.
Europe's adhoc approach was depressing, but the structures are wrong. I don't believe you can effectively have free trade and a common currency without political unity. Ireland's little guarantee highlights the problems that ensue. Basically if Ireland were outside the Euro it would be adrift in the ocean with Iceland, but when the problem became critical it was an Irish 'solution' as there is no effective and fast European means of arriving at a decision on such matters, and there should be. But equally by going it alone we created all sorts of problems for others. I do know the UK lot were working on plans for some time. Yesterday did not come entirely out of the blue.
Asia generally is up. Time for a few hours sleep.
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