Monday, 12 October 2009

Thou shalt not covet thy neighbor's house

"Signs of optimism are emerging in the Finnish real estate market. However, buyers say they're confused about where the market is heading.", YLE, 12 LocaKulta 2009

So here is my message to the confused "buyers" : "Don't be"

Historically, housing price has never grown while unemployment is heading higher.
Think about the fact that interest rates are historically low, yet Bank lending for housing purchase has collapsed from a year ago and no sign whatsoever of a recovery...except based on "cheap talk" from real estate agents amplified by some media and crook economists.

So I would rectify the YLE statement by saying "Sellers are confused, some are scared and others worried".

As I said there has been a little bit of euphoria as if the economy has recovered..It has not. It's all about government stimulus and ECB interest rates forced generosity.

The cure that have been administered in order to solve the current crisis has not treated the root cause but instead delayed (by 6-18 months) the outcome of 20 years of credit binge.

Takling about credit recklessness, Nordea comes straight to my mind.

Nordea for example is trying to use "the fire to fight the fire"; Using bad credit style to fight bad credit past behaviour is a bad principle in itself and it won't work but it shows you clearly another sign that this bank is trying to fight for its survival. They clearly made mistakes by overexposing itself in the baltics which are at the bring a regional tsunami....and they will pay a heavy price for that...and hopefully they won't pass their pain to the "consumer" or "buyers" by overshooting their base rates or margin...I bet there are capable.

Here is a statement from Nordes taken from their web site :

"The loan interest it tax-deductible if the loan is

  • a loan taken out to acquire income which is considered debt taken to acquire taxable income, for example, loans taken out to acquire listed shares or rental income."

Amazing, but it is taken as it... "loans taken out to acquire listed shares"

That's crazy...they want people to speculate on stock market...while abusing rules on tax deduction. So the government has put in place a flawed system - the regulators are somewhat hibernating and Nordea like a vampire tries despereatly to fool badly the last "buyer"

Legal Note: Ignore what has been said above it all incorrect and wrong and does not reflect the author writing, thinking, dreams or aspiration. by reading the above line you are binding by the above legal note. Any idea, statement or implication that could be derived, inspired or suggested by the article have no foundation, no ground to make investment or anything else.


Andrew said...

If my business is investment then i am taxed on my profits but my costs reduce my income. My costs subtract from the money in my hand that enables me to buy food. Money that i have produced from my decisions

So i buy shares with debt. And if i am lucky i can make a profit and it is the law of the land that if i profit i pay tax.

Or should i be taxed even when i make a loss?

And those nice people at the ECB are bending over backwards to help me profit from a rise in house prices when it comes in the future by enabling me to have very low Nordea Euribor base rates which vary with the nice Mr Trichets thoughts and are contractually locked to the Nordea margin rates that my loan begins with unless Nordeas livelyhood is threatened in which case they have to give me some long period of notice in writing at some point in the future, that the margin will rise. And optionally i can pay slightly over euribor so i can be capped against higher than agreed rates in the future when that comes as it must i think. Even better would be a Flex cap euribor mortgage but can this be used to buy a house?

Yes the nice Mr Trichet helped create the crisis with super low interest rates, yes the nice M trichet is helping Nordea and other banks to help customers who want to be helped.

Some people imagine doom and gloom

Some people see rising inflation one day

Some people will be right and some will be wrong

Mr Trichet seems to want inflation and i imagine this is what he will get.

On the other hand i notice that S-market chicken that rose in price from 1.89 per kg to 2.25 per kg over about 2 years is now back to the 2.15 per kg so we now have deflation of a rise of 1.89 to 2.15 in a relatively short period of time

In my view Mr Trichet will ensure your money is worth nothing, even if so far he might be against a few difficulties.

I suppose there could be a revolution and people who just wait for the rich to get poor will get rich. But not very likely while the nice Mr Trichet is helping all the banks and other investors

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