Aug 17, 2023 20:37:44 GMT NATH45 said:

Investor who accurately predicted ‘08 housing crash bets $2.5 billion on 2023 Wall Street catastrophe

www.news.com.au/finance/economy/world-economy/investor-who-accurately-predicted-08-housing-crash-bets-25-billion-on-2023-wall-street-catastrophe/news-story/f3b5af9d1745323eb1860ddbd10487dd

The running joke about Burry is that he successfully predicted 10 of the last 1 crashes.

There is a lot to be nervous about though, the Chinese economy is going over a cliff and nobody is paying attention.

Aug 17, 2023 20:37:44 GMT NATH45 said:

Investor who accurately predicted ‘08 housing crash bets $2.5 billion on 2023 Wall Street catastrophe

www.news.com.au/finance/economy/world-economy/investor-who-accurately-predicted-08-housing-crash-bets-25-billion-on-2023-wall-street-catastrophe/news-story/f3b5af9d1745323eb1860ddbd10487dd

He's been dining out on that prediction ever since. What's his record since then?

Burry likely is not wrong here. but this is not a 2008 prediction, everyone is predicting that the amount of corporate offices that are empty still but still valued as if they were full is just not sustainable and a correcting will be coming.

Almost certainly will be bail outs too. Been following this and it looks like a trillion and half dollar market in real corporate estate debt that banks simply are not prepared to deal with. Best case scenario for a 40% drop in value is 300 banks collapse. Expected that 35% to 40% loans will not be refinanced do the massive changes in projected value.

Attempts to shore up defenses of a crash by increasing bank holdings amounts and reducing overleveraging are still being shot down, so we get to hear a lot of being too big to fail in the future.

Aug 18, 2023 1:45:29 GMT c said:

Burry likely is not wrong here. but this is not a 2008 prediction, everyone is predicting that the amount of corporate offices that are empty still but still valued as if they were full is just not sustainable and a correcting will be coming.

Almost certainly will be bail outs too. Been following this and it looks like a trillion and half dollar market in real corporate estate debt that banks simply are not prepared to deal with. Best case scenario for a 40% drop in value is 300 banks collapse. Expected that 35% to 40% loans will not be refinanced do the massive changes in projected value.

Attempts to shore up defenses of a crash by increasing bank holdings amounts and reducing overleveraging are still being shot down, so we get to hear a lot of being too big to fail in the future.

This is only an issue if the banks foreclose, something I'm sure they're desperate to avoid.
So we will have a lot of BS sitting on the balance sheets until people can no longer service debt.

This is the real question across all the asset classes, when money was cheap what did people invest in when repayments weren't important.

The banks are the largest owner of commercial real estate with 150 or so regional banks widely over leveraged. When refinancing hits in the coming years, they will see their payments vastly drop, and start a collapse spiral. Corporate and investment owners widely got out of the commercial field during COVID, but banks cannot unload as easily.  Right now 17% of corporate real estate is up for lease so selling the assets will be selling at a massive loss, when the market is down heavily and no one is buying.

Every major firm in the US is saying this will be a disaster with banks who will have to shoulder the crash themselves almost entirely.

The 2008 housing crash was something a lot of people seen coming. My whole livelihood has always been building houses and remember reading some pretty concerning stories about the bottom falling out on the whole industry as early as 2004-2005-2006, back when I would read the Dallas newspaper every day, just several articles predicted that happening. It did shut down all the residential building around here in 2009-2010-2011, we survived and were very fortunate that commercial construction was thriving around that time around here, we survived on 2 huge elementary schools, a huge library, and a 3 story residence hall we built at a local college. Scary times to be a carpenter but we were blessed.

I'm no economist, but I spent a big part of the last 5 or 6 years warning people of borrowing too much when things were good (ie; low interest rates)

At 2%, it was a push for some people I know to live comfortably. I warned many, what happens when rates hit 4% or 5%... "it will never happen Nath.. " is what I heard. We're at 6% and reality has set in for a lot of people.

On a much larger scale - I can't think of anyone who seems to have the answer. Especially the RBA or here, the Australian Government. Our Government is more focused on other things to distract us of our impending doom.

Raising interest rates to curb inflation seems to have had little impact on spending. Those with money, spend it and half of us seem to have alot of cash still to spend. Every second person I know has a new car and travels regularly either overseas or interstate for frequent Holidays.

The lower/working class then battles through another interest rate rise and believe it or not, a lot of property investors aren't faceless magnates vampiring the blood out of renters, a lot of investors are working class Mum and Dads who are managing two mortgages and need to increase the rent to make their own repayments - because according to politically minded young people, negative gearing is also evil.

So, we're in a " housing crisis " and the lower income people don't have a place to live. The only answer the Government has is to tell people who can build to build more houses. But borrowing power has gone down and off-the-plan house and land packages are stupidly big and expensive, and interest rates are high, so.. But if you build a house with the intention of renting it out, you're criticised for raising the rent to meet your repayments. Ethically you can't win.

Then we've got (deliberate) supply chain issues, especially on food, that big FMCG brands like Coles and Woolworths are still blaming Covid for, or pretending the war in Ukraine is now responsible for. So there's less product in theory (despite what growers, and manufacturers suggest) which drives inflation. But the Government's answer is to bring in more immigrants. So theres this... and the a housing crisis and their answer is to increase the population at an accelerated rate.. righteo.

Regionally across my state, there lies a graveyard of condemned houses due to last year’s floods. Insurance companies have refused do their jobs in a lot of cases arguing " there's floods, and then there's floods " and putting additional, unnecessary pressure on the housing market. Can these houses be repaired? Of course they can be. But a quick hygiene certificate with " it's fucked " nailed to the fence is cheaper than a rebuild, leaving owners to either pay for the repairs themselves or sell the land at a lose. Does The Government care.. no. Of course not. Just build another house. Or two if you can, because the 500,000 fruit pickers and unskilled workers coming over this year need a house too.

Rant over.

Aug 18, 2023 22:21:36 GMT NATH45 said:

I'm no economist, but I spent a big part of the last 5 or 6 years warning people of borrowing too much when things were good (ie; low interest rates)

At 2%, it was a push for some people I know to live comfortably. I warned many, what happens when rates hit 4% or 5%... "it will never happen Nath.. " is what I heard. We're at 6% and reality has set in for a lot of people.

On a much larger scale - I can't think of anyone who seems to have the answer. Especially the RBA or here, the Australian Government. Our Government is more focused on other things to distract us of our impending doom.

Raising interest rates to curb inflation seems to have had little impact on spending. Those with money, spend it and half of us seem to have alot of cash still to spend. Every second person I know has a new car and travels regularly either overseas or interstate for frequent Holidays.

The lower/working class then battles through another interest rate rise and believe it or not, a lot of property investors aren't faceless magnates vampiring the blood out of renters, a lot of investors are working class Mum and Dads who are managing two mortgages and need to increase the rent to make their own repayments - because according to politically minded young people, negative gearing is also evil.

So, we're in a " housing crisis " and the lower income people don't have a place to live. The only answer the Government has is to tell people who can build to build more houses. But borrowing power has gone down and off-the-plan house and land packages are stupidly big and expensive, and interest rates are high, so.. But if you build a house with the intention of renting it out, you're criticised for raising the rent to meet your repayments. Ethically you can't win.

Then we've got (deliberate) supply chain issues, especially on food, that big FMCG brands like Coles and Woolworths are still blaming Covid for, or pretending the war in Ukraine is now responsible for. So there's less product in theory (despite what growers, and manufacturers suggest) which drives inflation. But the Government's answer is to bring in more immigrants. So theres this... and the a housing crisis and their answer is to increase the population at an accelerated rate.. righteo.

Regionally across my state, there lies a graveyard of condemned houses due to last year’s floods. Insurance companies have refused do their jobs in a lot of cases arguing " there's floods, and then there's floods " and putting additional, unnecessary pressure on the housing market. Can these houses be repaired? Of course they can be. But a quick hygiene certificate with " it's fucked " nailed to the fence is cheaper than a rebuild, leaving owners to either pay for the repairs themselves or sell the land at a lose. Does The Government care.. no. Of course not. Just build another house. Or two if you can, because the 500,000 fruit pickers and unskilled workers coming over this year need a house too.

Rant over.

You have summarised the issues very well.
The Australian Government is doing what it always does when the housing market looks shaky, finding a way to kick the can down the road to the next government.

"In September the Albanese government raised Australia’s permanent migration intake by 35,000 places to 195,000"

That is a lot of people to bring into a country that already doesn't have enough accomodation.
Not sure they have any choice though with job vacancies sitting unfilled and unemployment around 3%.
It is a but of a mess though, we are in so much trouble.
The NDIS and the Pension, we simply can't afford and it is going to wipe us out soon.

Not sure if anyone's paying attention but I expect the fed has very quietly taken the economic soft landing off the agenda.

If they truly don't expect inflation to return to normal levels until 2025, then interest rates are going to remain high for the foreseeable future. This almost guarantees a recession, new borrowing is at GFC levels and treasury bonds are nudging 5%. It's a bad time to be holding underperforming highly leveraged assets.

I strongly suspect there are some large players who are manipulation asset prices with their trades, because it is cheaper than taking the loss.

What I have come to realise is that I cannot accurately predict the outcome because the money printing of the last decade has never been tried before, there are no precedents of how this plays out, there is also government policy which can skew the outcomes.

I have a bad feeling that we go to bad places from here, I can't see how inflation can be controlled until the asset bubbles of QE are deflated, but I balance that against the knowledge that they could totally change the rules to keep the game running another few years.

The US is about to hit a recession but from the student loan pause ending. That will be money ripped from the economy and consolidated to select banks. And well, banks losing money as more and more just refuse to repay.

Sept 24, 2023 7:45:16 GMT c said:

The US is about to hit a recession but from the student loan pause ending. That will be money ripped from the economy and consolidated to select banks. And well, banks losing money as more and more just refuse to repay.

Everyone keep an eye out for the person taking your order at McDonald's crying. 


Interest rates are choking out the housing market, that's what breaks first. 
Then real estate prices correct and the small banks with commercial exposure break. 

I can't find it now but the US treasury department was talking about buying it own debt. 
I wonder if people get that the money they're sending to Ukraine is being borrowed at 5%.
This behaviour is frightening, the more the government spends the higher interest rates go.

Seriously though, who is going to keep buying all this US debt, do people realise there has to be a buyer? 

Almost no one considers US debt a risk.

As for the housing market it deserves to crash. It is propped up by investments firms buying houses on cheap loans to then turn into rentals. That was what drove the inflation and it only stopped when rates were jacked up high enough to no longer justify the costs.

Also interesting what people consider problematic spending. Cutting taxes is always good for the economy, but add a little spending and it is the end of days. US has a deficit solely because he stopped taxing corporations and the rich. Reverse the Trump, Bush and Reagan tax cuts and we would be paying off debt not increasing it even without cuts.

But the party of cut taxes and spend like a drunk whore does not give a shit about debt when they are in office. Cut taxes go to war, cut taxes go to war, destroy the economy, cut taxes, destroy the economy, create the greatest fraud event in US history. Then bitch the the GOP SENATE want to give a few billion to the ukraine after driving up the debt trillions and demanding far more for drones and a wall for the southern border.


I do still like how American domestic policy is being blamed for inflation internationally. I do also find it hilarious that people who claim they know what is best for Americans are also people who need to be surrounded by security because their own people came to hang them.

Sept 25, 2023 0:06:20 GMT c said:

Almost no one considers US debt a risk.

As for the housing market it deserves to crash. It is propped up by investments firms buying houses on cheap loans to then turn into rentals. That was what drove the inflation and it only stopped when rates were jacked up high enough to no longer justify the costs.

Also interesting what people consider problematic spending. Cutting taxes is always good for the economy, but add a little spending and it is the end of days. US has a deficit solely because he stopped taxing corporations and the rich. Reverse the Trump, Bush and Reagan tax cuts and we would be paying off debt not increasing it even without cuts.

But the party of cut taxes and spend like a drunk whore does not give a shit about debt when they are in office. Cut taxes go to war, cut taxes go to war, destroy the economy, cut taxes, destroy the economy, create the greatest fraud event in US history. Then bitch the the GOP SENATE want to give a few billion to the ukraine after driving up the debt trillions and demanding far more for drones and a wall for the southern border.


I do still like how American domestic policy is being blamed for inflation internationally. I do also find it hilarious that people who claim they know what is best for Americans are also people who need to be surrounded by security because their own people came to hang them.

I didn't say the USA was a debt risk, I said that there needs to be a market for the debt.




I have also been pretty clear that I don't think this is a Democrat versus Republican issue.
It is time for someone to have a serious conversation with the American people about what they want versus what they are prepared to pay for.
This is the classic conundrum that politicians shy away from and promise a land of everything where nobody has to pay.
It is the rising interest rates that bring this into sharp focus.

For reference this is what I am talking about:



If the USA doesn't hit a recession, this is the projected GDP:



At 3.5% that's what...  $1.375 trillion?



That's about 10% of government spending going to just service the interest.
And because you don't have the cash, that means you have to borrow to pay the interest.
This is not sustainable and I am not talking about the risk of the USA defaulting, a country that issues it's own currency cannot default.


Maybe people don't realise that every time the government spends more than they have collected in taxes, they need to borrow money to pay.
This is what Treasury bonds are used for.

That means someone or a collection of someone's has to buy $1.5 trillion of Treasury Bonds.

Who is buying the Treasury Bonds you ask?





The question is whether domestic institutions will buy the ever increasing amount of bonds considering their finite resources.



You can see most of the growth comes from foreign purchasers.
Which brings us to who is the 36%?




There is one name near the top of the list that should make you very nervous.
As Nations move away from the USD as a reserve currency they don't need to hold USD and they don't need to hedge with bonds.


I am not arguing politics here, just economics.

The American people have no say in this. They cannot afford lobbyists. And those with money for lobbyists are the ones who got us into this mess. Most of the US believes that the more money you make, the more you should pay in taxes. Lobbyists disagree.

Cannot change the lobby system, as lobbyists obviously would be against that. Cannot change cash equally speech either, as lobbyists also use that. Fuck, right now you can even give unlimited gifts to Supreme Court justices and suggest they rule a certain way in your favor. GOP is in favor of all of this and filibuster means cannot change it even with majority vote.

So not sure why people claim the American people need to do things. The only thing we can do is revolt and force chance with violence, as our government is designed right now to minimize actual democracy.

Look at gun control, most of America supports more common sense gun control, but our lawmakers after meeting with lobbies, want less gun control than we have now not more. We pay 10 to 100 times for pharmaceuticals than every other country and almost all of America opposes this, but their lobbies make our lawmakers vote against price control that every other first world country implemented.

The will of the lobby is what happens, not that of the people.  So maybe our lawmakers need to have a serious talk with our lobbies about unlimited borrowing.  Or each other over voting based on favors gained and not the will of the people.

Sept 25, 2023 2:41:31 GMT c said:

The American people have no say in this. They cannot afford lobbyists. And those with money for lobbyists are the ones who got us into this mess. Most of the US believes that the more money you make, the more you should pay in taxes. Lobbyists disagree.

Cannot change the lobby system, as lobbyists obviously would be against that. Cannot change cash equally speech either, as lobbyists also use that. Fuck, right now you can even give unlimited gifts to Supreme Court justices and suggest they rule a certain way in your favor. GOP is in favor of all of this and filibuster means cannot change it even with majority vote.

So not sure why people claim the American people need to do things. The only thing we can do is revolt and force chance with violence, as our government is designed right now to minimize actual democracy.

Look at gun control, most of America supports more common sense gun control, but our lawmakers after meeting with lobbies, want less gun control than we have now not more. We pay 10 to 100 times for pharmaceuticals than every other country and almost all of America opposes this, but their lobbies make our lawmakers vote against price control that every other first world country implemented.

The will of the lobby is what happens, not that of the people.  So maybe our lawmakers need to have a serious talk with our lobbies about unlimited borrowing.  Or each other over voting based on favors gained and not the will of the people.

That is straight out not true.
Politicians promise what they can't deliver then proceed to make excuses why they can't do it, nothing to do with lobbyists.
Everything to do with basic economics and the idea that you cannot offer people more than they are prepared to do so.

At the moment governments promise:
1. More to the lower socio-economic class
2. Encouragement to the aspirational middle class
3. Tax relief for high income earners
4. Business friendly operating environments

All of these interests run in competition with each other if you have any interest in balancing the books.
Biden is talking about Billionaires paying their fair share... Great start, but it's not a serious attempt at balancing the books.
It is theatre for his re-election.


When was the last time you heard a politician tell the American people "No"
Was it JFK? 

I'm a bit confused today.
The USA is dealing with record inflation and the Fed is desperately trying to jawbone it lower.

The UAW is striking for a 46% payrise and a 32hr work week...

... And Biden is going to become the first sitting president to visit a picket line?

How is that not insanely fanning the flames of inflation?

So, we're officially at this point now..

Love that Trump has been there for several days now talking to pickers and it is cool. Biden does it and HOLY SHIT OMG THE SKY IS FALLING.

It is interesting though, for years now the conservatives said liberals were getting brainwashed into Leninism and Marxism. Which then lead some to learn what these concepts are and how they are applied in the modern world. One neat concept that Australia itself makes use of from socialism is that of price control.

As the boomers who control out congress die, the younger generations will seek to bring in price control to deal with this exact problem. Someone else will have to pay for the "research" of these companies or society can just go without.

Sept 26, 2023 20:33:13 GMT c said:

Love that Trump has been there for several days now talking to pickers and it is cool. Biden does it and HOLY SHIT OMG THE SKY IS FALLING.

It is interesting though, for years now the conservatives said liberals were getting brainwashed into Leninism and Marxism. Which then lead some to learn what these concepts are and how they are applied in the modern world. One neat concept that Australia itself makes use of from socialism is that of price control.

As the boomers who control out congress die, the younger generations will seek to bring in price control to deal with this exact problem. Someone else will have to pay for the "research" of these companies or society can just go without.

Always with the tribalism.... 

If the Fed is trying to apply the brakes, the White House needs to at a minimum take its foot off the accelerator, it certainly can't be foot to the floor. 

____

In other news, the 10YT bonds have crossed 5%
This is going to suck a lot of cash out of the market, why speculate when you have a guaranteed 5% in a volatile market.
The speculators and traders will remain, but there is little reason to hold big ca stocks in this environment. 

I have all my cash (not that there's that much of it) in high interest bank accounts. I'm getting 4.8% on term deposits and around 4.3% on accounts with no locked in terms.
Not bad... I expect there's better rates in the USA. 

I also expect people to start pulling out of low yield REIT funds which is going to compound the banks problems with commercial RE. 

Sept 26, 2023 19:50:21 GMT NATH45 said:

So, we're officially at this point now..

That package looks like lube

Sept 26, 2023 23:52:58 GMT Gyro LC said:

Sept 26, 2023 19:50:21 GMT NATH45 said:

So, we're officially at this point now..

That package looks like lube

Sept 26, 2023 19:50:21 GMT NATH45 said:

So, we're officially at this point now..

It is the best butter though... If we had a Royal Rumble of butter Lurpack would reign supreme.

We're at this point now,

" Secret briefings inside the Reserve Bank reveal a startling surge in the number of middle-class Australians on six-figure salaries seeking a financial crisis support.

They reveal the NDH has seen a “significant increase in hardship requests” over recent months – especially from Aussies running into strife for the very first time.

“The NDH is experiencing an increasing volume of calls from people who have not experienced financial hardship or drawn on social services previously,” the memo reads.

Many callers were gainfully employed. Examples were given of mortgagees on six figure salaries residing in prosperous suburbs of Sydney.”

News.com.au

Now, even the wealthy are struggling to pay their bills.

Oct 2, 2023 4:57:51 GMT NATH45 said:

We're at this point now,

" Secret briefings inside the Reserve Bank reveal a startling surge in the number of middle-class Australians on six-figure salaries seeking a financial crisis support.

They reveal the NDH has seen a “significant increase in hardship requests” over recent months – especially from Aussies running into strife for the very first time.

“The NDH is experiencing an increasing volume of calls from people who have not experienced financial hardship or drawn on social services previously,” the memo reads.

Many callers were gainfully employed. Examples were given of mortgagees on six figure salaries residing in prosperous suburbs of Sydney.”

News.com.au

Now, even the wealthy are struggling to pay their bills.

Crazy that people see leverage as an accelerant only to wealth... Whatever you're doing leverage will make it happen faster, even if that's burning your finances to the ground.

I never got people borrowing high 6's even 7's without their sphincter rattling.

I'm a big believer in, a lot of this cost of living crisis being driven by not necessarily greed, but by how high our expectations have grown over the last 30 years.

Sure, it was easier for previous generations to buy a modest house on a modest income. But current young people don't want a modest house, or an older house, or a smaller house.. they expect big, new and bold and once upon a time, the banks were happy to give people the money to spend.

How someone on less than $100k could walk into a bank and ask for over half a million plus without cold sweats and anxiety is beyond me.

A current conspiracy suggests, the current interest rate isn't the FU, it's a normal rate, let's be frank. I was paying higher numbers upon my first mortgage. The con was deliberately lowering the rate for such a long period of time to convince people (particularly those who were struggling to) to enter into the property market - then, raise those rates and collect the cash for years to come. The more buyers and prospective buyers, the higher the demand for housing resulting in inflated house prices and more cash flowing back to banks/financial institutions and the governments through taxation. Easy con.

How people can struggle on six figures is beyond me. People always bitch about poor people having unreasonable expectations of being able to eat and have housing with only on job, but what is the excuse here? US is the same people making under 250k are living paycheck to paycheck. Get fucking bent. They claim the disabled can live on 10k a year, but they struggle live on 250k, 25 times more than we get? Then people wonder why I went fucking socialist.

Think I owe 250k for college now in loans.  I knew from the get go I was not going to every pay them back entirely though so I took the max I could and signed away 10% of my income over the poverty rate for 30 years.  So far, I paid 0, and next disability review, the loan is nullified finally.

Earn big, spend big.

Lifestyle inflation - as their salary grows as does their spending.

That's how people on big money get into big time financial problems.

I know plenty of guys who were given promotions. They'd pick up a few hundred bucks extra a week as a result. Instead of banking that money or using it to live a little bit more comfortably, ie bills, living expenses, etc and eventually creating savings they'd see that few extra hundred bucks as a means get finance for a new car, or boat, or bike. Or in the case of two people I know, they're both single, and bought "lifestyle properties" - 5 bedroom houses, on big semi-rural blocks, pools, etc and newly financed cars in the driveway. No kids, no partners... just two women on either side of town, living alone in giant houses and a lot of debt.

Oct 2, 2023 5:47:52 GMT c said:

How people can struggle on six figures is beyond me. People always bitch about poor people having unreasonable expectations of being able to eat and have housing with only on job, but what is the excuse here? US is the same people making under 250k are living paycheck to paycheck. Get fucking bent. They claim the disabled can live on 10k a year, but they struggle live on 250k, 25 times more than we get? Then people wonder why I went fucking socialist.

Think I owe 250k for college now in loans.  I knew from the get go I was not going to every pay them back entirely though so I took the max I could and signed away 10% of my income over the poverty rate for 30 years.  So far, I paid 0, and next disability review, the loan is nullified finally.

NATH45 hit on it pretty well, but in my extensive experience people's lifestyles tend to be about 105% of their income, whatever that income is.
Nicer suburb, nicer car, nicer school for the kids, it all goes pretty quick.
It is also the case that in Australia the tiered tax system bites you pretty hard, especially if you are a single income family.

Not that I think these people are blameless, it is crazy to take on debt without counting the cost of higher interest rates, but the RBA said we would be in a low rate environment for years and the governement sheltered people from the impacts of Covid and the GFC, no recessions so people never got that shot accross their bows to straighten up.

Lifestyle creep is definitely a thing.

Oct 2, 2023 5:47:52 GMT c said:

How people can struggle on six figures is beyond me. People always bitch about poor people having unreasonable expectations of being able to eat and have housing with only on job, but what is the excuse here? US is the same people making under 250k are living paycheck to paycheck. Get fucking bent. They claim the disabled can live on 10k a year, but they struggle live on 250k, 25 times more than we get? Then people wonder why I went fucking socialist.

Think I owe 250k for college now in loans.  I knew from the get go I was not going to every pay them back entirely though so I took the max I could and signed away 10% of my income over the poverty rate for 30 years.  So far, I paid 0, and next disability review, the loan is nullified finally.

My main issue with socialists is that they believe they deserve a share of other people's money without having worked for it.
That very notion is offensive for me, you don't see people providing for their family and doing overtime to make their life better pushing for socialism...
Not a dig at you c but invariably those advocating for themselves getting a bigger share of the pie are the ones contributing sweet nothing to it.

I am all about guard rails and protecting the poor, but not subisidising peoples poor decisions.