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:
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 …
RTE Frontline 12th April 2010 – NAMA for the little person? from Irish Mortgage Brokers on Vimeo.
Irish Mortgage Brokers was featured on RTE’s ‘Frontline’ with Pat Kenny on Monday the 12th of April 2010. The topic of the day was about bailouts for home owners who are in trouble with their mortgages.
Noleen Blackwell of Free Legal Advice Centre was there on behalf of favouring methods to save home owners, and Karl Deeter of Irish Mortgage Brokers was there promoting the use of market mechanisms as a solution, along with arguing the case that for many people, bank ownership of their home is not necessarily a bad thing.
This is a hot topic in Ireland, in particular because many people feel, that taxpayers stepped up to save our banks, so now they should do the same in return.
I have been asked several times ‘what would you change’ in the mortgage market in order to prevent serious financial melt-down in the future, the truth is there is no single thing that will ever do it, our issues are a perplexing intertwining of regulation failure, greed, banking errors, mismanaged risk, fundamental misunderstanding of money markets and national failure. There are key players within this, first and foremost is our government, after that is our central bank/ regulator, and finally financial institutions.
Anyway, the one thing I would change if I could would be the security on asset lending, in a nutshell I would just change one rule, therefore removing the need to revamp the entire system, the rule would mean that asset lending is non-recourse beyond the asset upon which the loan was secured.
In plain English, if you got a mortgage then the only recourse a bank would have wouldn’t be to you (currently you are on the hook for 12yrs and more) it would be to …
In this clip John Stossel talks about the free market being a job creator as opposed to Governments, he covers points similar to those that Milton Friedman covered in his documentary ‘Free to Choose’, and the truth of the matter is that governments are highly inefficient in creating growth, they have a place in prevention of disaster but managing the economy too closely is an error, sadly it is a popular one.
