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Greece, or why Europe's doomed

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    Meanwhile, over in Asia, yet another reason to fear a Chinese economic collapse. On the other hand, they have finally begun to properly clamp down on wealth management products. About 10 years too late, but it's something.

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      Scary data of the day:



      HELOCs were 12% of GDP? That's insane. And by all accounts the debt and housing situation has only got worse since then.

      Prompted by discussion of Canadians drawing down HELOCs to lend second lien to subprime borrowers. Jesus.

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        Inner Mongolia's economy overstated by 40%

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          The most fascinating part of that article is that China has a rust belt? I must say, i'm impressed. That didn't take long.

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            Originally posted by Ginger Yellow View Post
            Scary data of the day:



            HELOCs were 12% of GDP? That's insane. And by all accounts the debt and housing situation has only got worse since then.

            Prompted by discussion of Canadians drawing down HELOCs to lend second lien to subprime borrowers. Jesus.
            Fortunately (a bit late, IMHO) they've just brought in (Jan 1) a stress test for all new mortgages. Buyers need to be able to handle the payments in the event of a 2% rate rise. Previously the stress test was only for those who had an insured mortgage (below 20% down payment).

            It'll have a short-term dampening effect, but insanity-as-usual should return in due time.

            Obvious, but it should be noted, we're one of the biggest and least densely populated plots of land on the planet. We should be able to build affordable housing for as many what wants it.

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              Does that apply to HELOCs and second liens, or just first mortgages? 2% seems pretty low, too. The UK's minimum increase is 3%.

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                It may be low, but it's pretty much our first foray into this sort of thing, so maybe 3 or higher would have been considered too much of a shock to the market. Who know.

                From what I can find, it's mortgage only, but I could be wrong.

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                  Just checked:
                  For the purpose of this Guideline, a “residential mortgage” includes any loan to an individual that is secured by residential property (i.e., one to four unit dwellings). Home equity lines of credit (HELOCs), equity loans and other such products that use residential property as security are also covered by this Guideline.
                  Not sure what the scope of the regulation is though. It applies to federally regulated lenders, but I don't know if Canada regulates by entity type, like the US, or by lending activity, like the UK.

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                    Well if you don't know...etc.

                    Of course, we're selling mom's house this spring. Would have been realllll nice to have sold it last.

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                      "They're going to lose a little bit of buying power when January 1st rolls around. So they're looking to buy now," said Hull, who was hosting an open house in the city's Pineview neighbourhood Sunday afternoon.

                      "They're going to lose anywhere from $50,000 to $100,000 in buying power, depending on where they are on the scale ... it could take them from being able to afford a home, to not being able to afford a home."

                      One TD Bank economist has estimated that a potential buyer of a $1-million home who put 20 per cent down would see their purchasing power knocked down by about 15 per cent.
                      This kind of coverage is really annoying. If you can't afford a 2% rate increase, you're not losing "buying power". You can't afford that house. My understanding is most Canadian mortgages reset after five years. The chances of rates being at least 2% higher in five years are extremely good. And if they're not, it's probably because the economy is in the tank.
                      Last edited by Ginger Yellow; 08-01-2018, 16:35.

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                        Yeah. That's the kind of thinking that says if you have $5 left over after your $659 Jaguar lease payment, you can 'afford' to drive a Jaguar.

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                          I'm increasingly scared about what happens when rates normalise. We've got a generation of consumers and business owners and lenders who have no experience of policy rates materially above zero. And even in that environment we're seeing defaults pick up sharply on iffier consumer/SME lending in the UK and US. If you can't service loan interest now, how on earth are you going to do it when rates are 4% to 6%, as they usually are?

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                            That and the fact that we're virtually at full employment here, and consumer debt loads have never been higher. What happens when the job losses (eventually, inevitably) start?

                            I mean, we know what happens, but why don't people learn?

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                              Of note, two consecutive months of declining vehicle sales. And I've already seen an ad for 0% financing on the F-150...the single biggest selling vehicle in North America. Maybe you're just trying to keep a good thing going...or maybe you see trouble on the horizon.

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                                It happens because people who own one house are under the illusion that in some way they benefit from the rise in value of their one house. As a result they support measures which only really benefit land owners, builders, and people who own multiple houses, at the expense of everyone else. If you were to adequately tax people on the value of their house, and more importantly on the rise in value of their house, you'd quickly see an end to spiralling house prices.

                                At the moment there's great fuss going on in ireland. things got so bad in the last economic crisis that we did the unthinkable and introduced a residential property tax, and did all the valuations in 2013, when the country was balls to the wall bankrupt. We haven't built any houses since, the population has carried on growing, and as such house prices and rents have skyrocketed Now the time has come to revalue the houses, and instead of using the increase in taxes to build local authority houses, the government is going to change the tax to prevent people having to pay more, thereby insulating people from the rise in value of their house, thereby removing any incentive for the govt to do anything really to address the chronic housing shortage.

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                                  UK car sales have been poor for a long time (new car registrations 5.7% down in 2017), even with a lot of cheap auto loans being given, and diesels have basically fallen off a cliff. Petrol car sales were down in December too though.

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                                    Sounds like Greece got most of what it wanted in the latest debt showdown, apart from, obviously, notional principal write-downs.

                                    For the medium term, this includes the following upfront measures:

                                    The abolition of the step-up interest rate margin related to the debt buy-back tranche of the 2nd Greek programme as of 2018.
                                    The use of 2014 SMP profits from the ESM segregated account and the restoration of the transfer of ANFA and SMP income equivalent amounts to Greece (as of budget year 2017). The available income equivalent amounts will be transferred to Greece in equal amounts on a semi-annual basis in December and June, starting in 2018 until June 2022, via the ESM segregated account and will be used to reduce gross financing needs or to finance other agreed investments.
                                    The two measures mentioned above are subject to compliance with policy commitments and monitoring, as outlined below.

                                    A further deferral of EFSF interest and amortization by 10 years and an extension of the maximum weighted average maturity (WAM) by 10 years, respecting the programme authorized amount.
                                    It also gets to pay off more expensive IMF debt. Speaking of, the IMF is basically on the fence about long-term sustainability.

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                                      Isn't that broadly how it is supposed to go. Greece implements reforms, the EU does things to the debt repayment load. The actual amount of the national debt matters less than the repayments on it.

                                      By the way, did anyone else think that the riots over the deal with macedonia were the most mental thing in europe this year. what is wrong with those people?

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                                        So the Greek Bailout is over.

                                        God only knows what this means. Greece can return to the bond markets to enable it to roll over debt, and not for current borrowing I suppose. god only knows what happens next.

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                                          Greek journalists arrested for reporting on alleged corruption/mismanagement.

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                                            In what could be the greatest display of trolling in the history of European politics, Yanis Varoufakis wants to become a German MEP.

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                                              This seems like a pretty stupid reason to bring down a government.Example no. 94 of how nationalism makes zero sense to me.

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                                                Depends on how much money they're getting from Putin to do it.

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                                                  Originally posted by Ginger Yellow View Post
                                                  This seems like a pretty stupid reason to bring down a government.Example no. 94 of how nationalism makes zero sense to me.
                                                  As happened often enough in Ireland, symbolic nationalism can often prove more significant than anything of meaningful substance.

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                                                    Not seeing any "official" coverage of this, but it seems Andreas Georgiou is finally free of the threat of prosecution for revealing Greece's real deficit back in 2009. Supposedly the prosecutor has decided not to appeal/revoke the latest acquittal.

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