Competitive Currency Devaluations

I have been talking for some time about a ‘rip off’ that the US will attempt to make against China, that it could take a belligerent form (default) or a traditional and less likely to cause a war option (devaluation of the dollar). It seems to be playing out and going for option two.

Competitive currency devaluations are alive and well in the world, why? Well, in early 09′ I wrote about it on the Paddy Power Trader blog:

“One way of paying bond holders back (but not ‘rewarding’ them) is via a devalued currency with an inflationary environment thrown in, in fact the big robbery of this century is going to be (as it was in the past as per the 1870s first, and then via Presidential Executive Order 6102 in the 1930’s) a dollar based one, the only way the US can pay its debts is to essentially rip off the debt holders, domestically that won’t be so bad, but internationally it …

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Interbank Yield Curve: 28th September 2010

It has been a while since I posted on the yield curve, the main reason was that I lost my daily treasury letter from Bank of Scotland when all of their reporting went back to the UK and the daily replacement by Lloyds didn’t offer sufficient time-line to give a full curve.

The interesting thing that has happened in the interim is that the rules regarding forward rate prices between mortgage rates and Euribor rates has disconnected, in the same way that the ECB and Euribor disconnected in 2007, by this I mean that it is fascinating to see the established relationship end but the implications are horrifying for borrowers because it has meant that their monthly payments have gone up at a time the ECB is keeping rates low for the purpose of loosening up the financial cogs.

Take a look at the difference between February of this year and today, we can see that the long term rates are coming down and that flattening of the curve means two things: the ‘new normal’ is predicted to be one …

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Mortgage Market Trend Outlook 2010

We have put together a report outlining the trends we expect to see in the Irish mortgage market in 2010. Many of the opinions have been substantiated from within industry and are evident in market information, however, we cannot say with certainty that anything mentioned is guaranteed to pass, only that we believe these trends are the ‘most likely’ and stating the reasoning behind them. You can obtain the report by clicking on the image below.

If you have any questions please feel free to call or email our firm regarding same.

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Approval in Principle, the flaws.

Our firm [and I am sure many brokerage firms] are witnessing a conundrum in the market which is causing both clients and the broker a huge amount of heartache. It is that of the ‘AIP’ or ‘Approval In Principle’ not being honoured by banks over short periods of time. One lender in particular [we can’t name names] is doing that on so many cases that we no longer consider their approvals as holding any relevance.

What is an approval in principle (A.I.P. is the broker-speak we use to describe them)? It generally means that you have given a bank enough information to make a strong [and yet preliminary] decision on a case, sometimes it is subject to further documentation, or they want to get a valuation report before making a full offer, in any case an AIP is NOT a loan offer but it is as strong an indication as one can get without dealing with solicitors, in the past an AIP was honoured almost exclusively and they were seen as fundamental to …

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The end of ownership

I had an interesting conversation with an Estate Agent recently who has been in the industry for over thirty years and he said that he felt he was seeing the ‘end of ownership’ in the young people today. That really got me thinking.

‘What do you mean by that?’ I naturally enquired, and basically he said that he was seeing a trend in young people not feeling any incentive to buy a house, not only in the short term but ever, ‘why would they buy, kit a place out and go to all the expense when they can just rent a place ready to go and any problem is the landlords?’ was his response. And one must admit that there is a large dose of common sense in that. Renting is no more dead money than mortgage interest is dead money, however, what it could mean for the future is that we become a nation of landed and un-landed citizens, which is ironic given that land ownership has played such a strong part in …

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The risk of mergers to consumers

There is much in the news about private equity firms and various banks being ‘in talks’ about how they may work together (translation: some type of potential merger of parts of the business or total merger). Every bank seems to be in the spotlight right now and rumours are rife while fact is thin on the ground.

Every headline of every paper carried a bank story today, it is almost like society has moved from its fixation with property to a fixation with banks and their core tier 1 capital. If we mentioned Basel II accord a year ago people would look at you funny, today that and other terms akin to it are entering daily discussion at an alarming rate.

There is (as of today) no certainty that banks are going to merge, fail, succeed, or do anything other than what they normally do, however, if we were to make an assumption that at least three or four banks were to merge …

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