Today's Bear food

cells

p1212 wrote: »

So then can you please explain what is liquidity guarantee and how is that useful? Or exactly what happens with the QE money?

The bonds being bought by central banks QE money (and very soon stocks) are owned by funds, investment banks etc... these institutions hold the wealth of almost everyone on the globe. Pension funds, insurance funds, private wealth etc... Central banks inject money into this system by QE, but this money will NEVER get out of the stock market. Fund managers job is to make money on stock exchanges, they will never take out that money and spend it in real economy.

And the goal was actually never to help real economy, the purpose of these trillions is to keep up the stock market and avoid collapse, which would otherwise happen cause real economy is actually in a very bad state. They don't even try to repair real economy, they just try to maintain the illusion of wealth against market forces with all this money and wait for a miracle in the meantime...

...which will never happen as the generation that should spend and create businesses is repaying their ever increasing mortgages, big student debt, then will try to save money for family, expensive education for their children, for bomad etc... - all of the side effects of high asset prices which we try to maintain for the former generations. They won't spend, they won't open businesses, they sink their money into paying back debt.

So while the young people have way worse life, the gap between stock prices/asset prices and the fundamentals is increasing, illusion of wealth is kept up, question is for how much longer, when MAERSK warns that world trade is falling like a stone, when china cannot stop the stock market collapse etc...

They know it's not working, but they don't want to tighten either or else it would pop. And one thing is for sure, when this one pops, that is not going to be nice.

such a load of trash

the world is getting richer every single year by any real metric you wish to consider.

How about these facts.

About 50 million brand new homes are being built in the world each year. Whatever paper money confusion and bias you have imagine yourself an alien looking at earth from far away would you conclude these additional homes are real or fake wealth?

The number of humans with access to good quality food, water, healthcare and education is going up rapidly. The worlds infrastructure is growing rapidly 'rail ports airports malls schools hospitals everything'

The knowledge and information capital of humanity only ever goes up

the only place where the world looks bleak and hopeless is where there are groups of bleak and hopeless congregating on special forums of confirmation bias and back patting.

AnotherJoe

p1212 wrote: »

So then can you please explain what is liquidity guarantee and how is that useful? Or exactly what happens with the QE money?
.

I'll ask again, If you understand this all so well, why didn't you jump in, say in 2009 or 2010 and make a bundle ? Global stock market up maybe 50% ? (Just guessing). House prices in the SE UK up 50% or more.

So less with the theory, smarter folk than you have lost a fortune betting on their economic fancies, more with the practical. When did you decide not to buy a house, or even worse sell one, and how's that decision worked out for you so far?

p1212

AnotherJoe wrote: »

I'll ask again, If you understand this all so well, why didn't you jump in, say in 2009 or 2010 and make a bundle ? Global stock market up maybe 50% ? (Just guessing). House prices in the SE UK up 50% or more.

So less with the theory, smarter folk than you have lost a fortune betting on their economic fancies, more with the practical. When did you decide not to buy a house, or even worse sell one, and how's that decision worked out for you so far?

This is not a theory, this is in the news every day. European central bank, BoE etc... does QE every week! See, around 0.6 TRILLION pounds in government and private company bonds:

http://www.bankofengland.co.uk/markets/Pages/apf/default.aspx

Let me explain our central bank prints money to buy government and PRIVATE COMPANIES debt. How could these companies ever go broke? They can't, they just issue bonds and even if market participants wouldn't buy them cause they worth nothing our central bank will still buy them up, making sure they can't go broke.

They've just said they will soon start buying stocks. Yes, our central bank will print money and will gamble it on the stock market and if some big company would go down, the BoE can just buy up their stocks and stop the stock from falling further, all in the name of "stability". They are abusing the free market every day with billions.

Or if you know this better then can you please explain what we have done with this 0.6 trillion exactly and why we haven't spent it on NHS or building houses? We could've built 2.5 MILLION houses from this money for 200K each. Or 5 million flats for 100K each. Or give 1.5 billion every week to NHS in the last 8 years.

The current government wastes much more money than brexits 350 million per week, who is responsible for this?

You should read more books about economy and ask these questions instead of bashing people who tell you the truth.

wotsthat

If someone believes the truth is that the government and Mark Carnage's central policy is to inflate house prices it's a very brave bet to short housing especially given the costs involved. Or stupid.

p1212

wotsthat wrote: »

If someone believes the truth is that the government and Mark Carnage's central policy is to inflate house prices it's a very brave bet to short housing especially given the costs involved. Or stupid.

Can you please just explain what happens with QE money?

Mortgagefreeman

p1212 wrote: »

Can you please just explain what happens with QE money?

It makes people who own property wealthier, and those on HPC foam at the mouth.:D

wotsthat

p1212 wrote: »

Can you please just explain what happens with QE money?

It's meant to stimulate inflation and, maybe, its had such an effect on the housing market. Maybe not.

I purchased a holiday home a few years ago. Mainly because I wanted one rather than a clever gamble but I did think buying after a crash when the government were trying to stimulate the economy would be a reasonably good time to buy.

You decided it would be a good time to short housing. It's a bit rich trying to blame boomers, the government and the BoE just because you took a punt and it went tits up. Especially when you knew and understood the truth.

p1212

wotsthat wrote: »

It's meant to stimulate inflation and, maybe, its had such an effect on the housing market. Maybe not.

I purchased a holiday home a few years ago. Mainly because I wanted one rather than a clever gamble but I did think buying after a crash when the government were trying to stimulate the economy would be a reasonably good time to buy.

You decided it would be a good time to short housing. It's a bit rich trying to blame boomers, the government and the BoE just because you took a punt and it went tits up. Especially when you knew and understood the truth.

Ok, so then BoE buys bonds held by the fund managers for some money. Than how exactly this money gets into real economy, to stimulate inflation and wage inflation? I am just asking cause I don't know.

Even if you are a private investor having a few hundredK in a fund and you made well, you won't just suddenly take out the money and spend it in real economy (apart from investing it in somewhere else - which means buying a house in the current climate - that's why house prices are going up).

So just explain me the process please in a bit more detail, I am eager to learn new things.

AnotherJoe

p1212 wrote: »

This is not a theory, this is in the news every day.
What that stocks are up and houses up and your short on houses is increasingly under water, most likely to a position where no house price crash of any value, even to 100% crash, will put you in a better position.

Let me explain our central bank prints money to buy government and PRIVATE COMPANIES debt. How could these companies ever go broke? They can't, they just issue bonds and even if market participants wouldn't buy them cause they worth nothing our central bank will still buy them up, making sure they can't go broke. So why then are you betting against them? Its nonsensical.

They've just said they will soon start buying stocks. Yes, our central bank will print money and will gamble it on the stock market and if some big company would go down, the BoE can just buy up their stocks and stop the stock from falling further, all in the name of "stability". They are abusing the free market every day with billions. So are you buying stocks? Or will you short those on the same basis as houses, eg "oh pricess will rise so I'll bet on a fall"

Or if you know this better then can you please explain what we have done with this 0.6 trillion exactly and why we haven't spent it on NHS or building houses? We could've built 2.5 MILLION houses from this money for 200K each. Or 5 million flats for 100K each. Or give 1.5 billion every week to NHS in the last 8 years. All i need to "explain" is that my stocks and house price is up.

The current government wastes much more money than brexits 350 million per week, who is responsible for this? Does it matter? Did you notice that the house you might ahve bought is now double or more what you could have bought it for?

You should read more books about economy and ask these questions instead of bashing people who tell you the truth. You should follow the convictions of your beliefs and buy into assets your theory predicts will rise. Instead, breathtakingly, you are shorting them, which is, frankly, insane if you think they will rise.

In any case, I dont need to read a book to see that house prices rose whilst you were shorting them despite actually believing that government action would make them rise ! I"m actually acting on your beliefs, now you've convinced me stock markets will rise so I've bought stocks. Have you?

Filo25

QE pumps liquidity into the banks, which was obviously a priority after the Global Financial Crisis.

It also increases demand for Government debt which helps support the price of it and hence reduces the interest expense for the government of financing that debt, which isn't an insignificant benefit.

Of course the suppression of interest rates also helps to boost asset prices at the same time.

But I never understand the nonsense of the HPC crowd which seems to view doing whatever you can through monetary policy to support an economy that has been in desperate need of stimulus since the global financial crisis as some sort of fraudulent attempt to manipulate the housing market just to annoy them.

The economy has basically been on life support since 2008, nobody's going to turn that off now just to satisfy the crash fetish crowd, who don't seem to mind the prospect of destroying the broader economy just to get their wish of lower house prices.

If the economy does start to grow more quickly going forwards I would expect the government to take the opportunity to tighten fiscal policy and reduce the still hefty defcit, ahead of any significant tightening of monetary policy as well (although an increase to the recent "normal" of 0.5% isn't out of the question).