"Nebulous" <Nebulous@pigtail.freeserve.co.uk> wrote in message
news:41a9930f$0$16573$cc9e4d1f@news-text.dial.pipex.com...
>
> "Jim Stewart" <stewart@ceet.niu.edu> wrote in message
> news:cob5jo$fcc$1@usenet.cso.niu.edu...
> >
> > "Nebulous" <Nebulous@pigtail.freeserve.co.uk> wrote in message
> > news:41a8e4b3$0$19154$cc9e4d1f@news-text.dial.pipex.com...
> > >
> > > "MacHamish" <russj41@concentric.net> wrote in message
> > > news:u4fhq0ddcl6djfvbqocv5a68fcj2obabs8@4ax.com...
> > > > On Sat, 27 Nov 2004 17:30:36 -0000, "Nebulous"
> > > > <Nebulous@pigtail.freeserve.co.uk> wrote:
> > > > >Actually he should have bought Euro's.
> >
> > The fact that he did not places a shadow on his genusness. Hindsight is
> > always easy.
> >
>
> It was intended as a joke Jim. If he got out of dollars and into gold he
has
> done very well, and much better than most people, although he has
> contributed in his own small way to the demise of the dollar. I was trying
> to suggest he should instead have done something (invest in Europe)  I
felt
> he would find difficult to justify to himself.

My Aunt took her money and has bought gold for decades. She would have
been much better in real estate or the stock market.


> > > >
> > > > >Either way each individuals flight from the dollar contributes to
its
> > > > >problems. America has to increase interest rates and tighten its
> belt.
> > > >
> > At the cost of more jobs and an increase in the homeless.

I am only watching the US, Australia, Mexico, and Costa Rica.  I have not
seen the quality of life drop with currency fluctuations.
> >
>
> Yes- as I've just said to MacHamish the free market is very unforgiving.
If
> it had been done a year ago it would not have hurt nearly so many people
as
> it is now likely too. Its either that or continue to watch the dollar
slide.

But that makes US goods cheaper overseas. Get your Big Macs here.....
>
> >
> > > > I agree, and it's unfortunate at this juncture in terms of the
global
> > > > economy.  We probably wouldn't be at this juncture were it not for
the
> > > > "international cummunity" refusing to see the real threat.  It's a
> pity
> > we
> > > > aren't all on the same page where militant Islam is concerned.
> > > >
> > Militant Islam has been a threat for two decades. But it is not a
> financual
> > threat.
> >
> >
> > > You're not at this juncture because of the international community.
You
> > > have reached this point because your government has pumped massive
> amounts
> > > of liquidity into the market by reducing interest rates to prevent a
> > > downturn. It did this just after the dotcom burst and then again later
> on.
> > > One of the impacts of this has been rises in house prices and people
> > > remortgaging to buy consumer goods.
> >
> > House prices have risen consistantly for about 40 years. Remorgaging is
> the
> > results of our tax laws, not any effect of interest rates.
> >
> > Market liquidity is only affected on the short term by the feds. Lower
> rates
> > encourages borrowing. Someone will eat the horse that brought them here.
>
> I'm not as familiar with the American data as the UK data,  but here the
> average price of a home has swung around 3 times average earnings for many
> years. It is now up to 5-6 times.

New buyers can get into a mortgage with about 33% gross or 25% net earnings.
Greenspan may be stupid, but the banks arn't. I am convinced they know
just how amny foreclosures are to happen in the next decade....


We are likely to see a correction in
> housing that could (although I don't really expect it to) see housing lose
> 50% of its value.  Our boom has largely been on the back of borrowed
money,
> both on credit cards and mortgages/remortgages. Incidentally one of the
> worst phrases I know is "release the equity in your home." people aren't
> releasing the equity in their home- they are taking on more debt and
> gambling their home on being able to repay it.

Yes, but the fact that it is tax deductible means some of the foolish
ones are driving new cars financed on the house...I get back about
$3000 per year from income taxes. And we pay no vat. never.

>
> Low interest rates encourage borrowing because people think they can
afford
> it. As rates rise they realise they can't. As banks realise people are
> struggling they tighten credit. So consumers are hit by a double whammy-
> interest rates on their current debts rise often much faster than the base
> rates and they find no-one willing to let them borrow at rates they can
> afford. I've been reading recently about credit card companies in America
> raising rates significantly for people with big balances, so it may have
> started already.

I run about $1500 per month onto my visa and pay it back with no interest.
If I could not pay, I would have 9%. If I did not pay for about 3 mos, the
rate would jump to 24%.

>
> > >
> > > Policy needed tightening at least a year ago to prevent a 'hard
landing'
> > but
> > > that wasn't possible given the political situation. So rates stayed
low
> to
> > > help until after the election and the hard landing now seems
inevitable.
> >
> > Wouldn't help much, one way or the other. Hard landing is comming, like
> > dotcom......
> >
> > >
> > > Your arms budget and military commitments haven't helped the
situation,
> > but
> > > it was there anyway without the recent jaunts.
> >
> > National debt. Becomes a problem as interest rates rise......
> >
>
> Yet they have to rise or people won't lend you more and you could default
on
> existing debt- bummer isn't it?

I payed off one house and have the other one financed so if I have to sell
it, I would
have no further debt.

You may not think us Americans are truly Scots, but I learned something
about money
from my family. They did come here first class in 1910. Engineers, all. and
they took
care of their own.

Hard times for most people means opportunities for others. Just got another
textbook
contract.

Jim Stewart