Lots of talk about housing bubbles, Brexit and the Nostradamus prediction of the last President of the USA being Obama. Economists and pundits trying to use their crystal balls.
So now it’s my turn.
Great Britain needs new friends – the current ones want to dump refugees by the million on an economy that cannot house nor fund them. Their biggest friend in the playground dragged them into the Iraq war on false pretences, so who needs more of the same? So the UK needs to find friends in Asia (The only place with growing and viable economies)
Why Asia? they have a growing middle class who can afford imported products from the UK (Including Scotland) in exchange for cheap clothes and electronics.
The UK and USA (Plus the ‘First world’ countries) have little to offer in exchange for their imported Asian goods. The machinery, skills and willingness for their populations to manufacture goods has gone. Pollution from heavy industry has also been outsourced to meet the green objectives. If you had to wear only clothes made in your own country, you would be broke or naked. You NEED cheap Asian goods.
Housing is the elephant in most living rooms these days. With wages largely stagnant for the last 30 years, hidden by cheap Asian imports and Government handouts, the rise in un-affordability has been disguised and repackaged as a ‘Boon’ – allowing home owners to use their houses as an ATM to subsidise their lifestyle as the 1% steal everything they can.
The big bang is on it’s way as people meet that point of no more lifestyle and no more house price rises. A glut exists in many markets but the vested FIRE (Finance, Insurance, Real Estate industries) interests keep poking it to try and resurrect it when it is in it’s death throes. Too much riding on having the sector remain alive. Australia’s mining boom is over and a 26 year bull run is about to come to an end. The only two sectors contributing to the GDP are housing and finance.
The recent $AU1.1bn promised to develop an ‘Innovation’ economy will go nowhere and the attitude of departments like Immigration to the topic indicate there is simply no hope – the average public sector worker is simply too stupid to get it. The poster boy for the innovation economy started a business, employed people and was doing well. Then he went for a holiday.
Upon his return to Australia he was told “You need to pick bananas for 3 months or go home”. More lost talent that every country desperately needs. Smart move Australia.
So, what happens?
Europe gradually dissipates under the weight of refugees who refuse to work or contribute to their hosts. The divisive nature of heir indolence and terrorist nature has brought countries like France to the brink of civil war (Their security head reckons 2 more mass murders and it will be full on civil war). According to Australia’s Department of Foreign Affairs and Trade, there are NO safe areas in France any more. Over 700 no-go areas that are Muslim terrorist strongholds does not make for an integrated and tolerant multi cultural society, especially when there are repeated mass shootings.
USA – they are set to choose between a madman and a shill. No way the people are going to be happy with that, especially when they can’t get $15 an hour and waitresses get $2 an hour. No concern with providing a living wage or healthcare – Must buy more guns. Beyond belief. With 50% of your potential customers on ‘Food stamps’ (Welfare) how is your economy going to survive or grow?
War – That’s always a money maker! China is just itching to go to war with the good ole USA over the Spratley Islands they stole from their neighbours. So that drags America’s friends into the playground fight. Both NZ and Australia have received their threats, despite the ‘Free Trade’ agreements much lauded benefits. With 1 billion people, 4 and 23 million are but drops in the bucket and certainly no threat.
With increasing impoverishment, no increase in wages and a poor outlook for the economy, the only people investing in housing are gamblers about to hit a massive losing streak. Return on investment is poor, barely covering costs, and no rent rises affordable by the tenants. With baseline affordability out of the question, sales are sluggish – fuelled only by cheap money and bullshit.
Housing will tank (Yes, I said that a year ago but who knew how low the Governments would stoop to enslave the population in eternal debt? NEGATIVE interest rates in Europe! Sorry, could not imagine that level of stupidity when I made my prediction). When will it tank? Well, the US presidential farce (Where 65% of people do not trust Shillary) and a desperate need to tank the currency to repay it’s debts inclines me to think a war will be declared at the end of the year.
War makes good profits.
USA can blame either Brexit or China as the trigger.
Tanking the economy to pay debts is therefore ‘justified’
Profits from war will go to the 1%
The population will pay the human cost
The population will patriotically buy ‘War bonds’ (That never get repaid – Like the UK did. Finally, a Court ordered UK to repay someone who was near death a few years ago)
The World map will be redrawn to suit the winners – as usual. All the minerals, water and oil will be taken as the spoils of war and the poor will be given Africa and the Desert.
Now, having enslaved their populations into housing debt – what do Australia and NZ do? Really, the housing bubbles should burst and someone take a haircut. Now – the banks will not willingly head to the barbers and bankrupting everyone kills the income stream. Owning houses is a hassle in administration and maintenance issues.
Dropping their ‘Book value’ forces the banks into insolvency. After all, they have only 2-3% equity as it is. Zero reserves (It’s all on the third world casino tables, knowing that ‘Uncle Government and the long suffering public’ will bail them out like last time if they make a mistake at the casino tables.
Can’t do that, the 1% would NOT be happy.
Problem is – If the Government prints zillions – YOUR debts also get diluted. Hmmm can’t achieve anything if everybody’s debts are reduced. Also – What changes if we all add a zero to everything? No – we need a winner and a loser. I’ll let you figure out who plays what role.
So – Cunning plan – Leave the house prices where they are and, to make up for the explosive printing of $, let’s raise the interest rates or extend the mortgage term.
Let’s set an extremely rough example :
House = $500,000
Income = $100,000
Interest = 5% for 20 years
Total interest $856,000
Total house cost = $1,356,000
Now, let’s change it after ‘Quantitative Easing’ has reduced the true value of our money by 50% :
House = $250,000
Income = $50.000
Interest = 7.5% for 20 years
Total interest = $1,284,000
Total house cost =$1.53m
So the bank still receives about $1.4m in total – they just need to include ‘Future payments’ as part of ‘Current valuation’. They will do this by ‘Securitising’ the loan (Pretending future payments have a current value).
Now, you say “I can’t afford the increased payments”. So the bank offer that High Street perennial ‘5 years interest free’ or ‘We’ll extend the term to 30 years’ or ‘We will make a balloon payment at the end’.
So the Government can take advantage of the ‘Pay now’ lower price to retire debt but you, locked into a mortgage and the difficulty of selling quickly or finding that sort of cash in a hurry, can get screwed into getting no debt reduction.
Cunning plan with the usual victims and winners.