Tuesday, May 5, 2009

A looming crash and where to bury economists

I have mentioned the Swedish interest rates and the housing and real-estate market before, but it is worth mentioning again, especially since several ”experts” on the subject is making mad statements. I wonder when the old media is going to interview a real expert that actually knows basic math and actually should be entitled ‘economist’. Apparently journalists hire doomsayers regarding harmless viruses or healthy fruits, but when it comes to economy and a lurking crash they find Mr. Positive. Am I the only one finding this very strange?

Johan Hansing, chief economist at the Banking-collaboration* (*my translation) apparently finds it very surprising that prices are going up and people are buying real-estate.
Really Johan? Did you find your title in a box with a chocolate pirate painted on the outside?

Another braniac that should be subjected to the witches’ floating-test is Bengt Hansson, analyst with the Swedish governments housing and credit department. This madman announces there is no crisis within the housing markets anymore since; pay attention now… *drum roll*…. The central bank has managed to keep consumption up!

And apparently the Swedish central bank isn’t pleased with how they have managed to destroy the economy so far, they are planning to cut rates even further. It is like living in bizarro world and mainstream economists are the ringmaster of the appending depression.

Remember what I have said before:
Please if you happen to bump into any of these mainstream economic as-holes during your long walks to find food in the future, please let a sign clearly point out for the rest of us where we can stop to piss and dance…

For those of you that do not know; prices are going up and people are buying things they cannot afford because interest rates are extremely low and there is much more money in the system. When this crisis continues and worsen; sooner or later the rates will go up, probably way up over 10% maybe even 20% or higher. So if you are stupid enough to borrow money you in reality shouldn’t be allowed to borrow and if you then are foolish enough to spend it on real-estate you actually cannot afford, please make sure, if possible, that you at least fix your rates, preferably for a long time. It will not help very much, but it might buy you some extra time.

On a related note; I said earlier that the stock markets were going to go up some at the end of April and beginning of May. However if you didn’t get out before, you should seriously consider it now. It might still move somewhat upwards, but it is all a shimmer of illusions built on fictive rates, much more money in the system and false hopes. Also, look closely at the numbers, there are fewer companies (than during a normal year) dragging the rest with of the markets upwards, but this will not last. Sell it all and buy gold.


  1. Actually, I would argue that once massive inflation hits, people are going to try and find any safe haven so relatively "safe" stocks are probably going to have a good time.

    Join me for a drink when governments start having trouble finding buyers for their debt? (actually, UK may have it already, and US Treasuries are going constantly upwards). Since some are already monetizing, they can of course just ramp that up, but in an inflationary scenario, that may be a tad hard to justify.

    Personally, I look forward most to the reinstating of the old "tar and feathers" process.

    Another day in the economic paradise of the western world. The fact that things have been so quiet makes me think you are right, something is about to crack soon ....

  2. "Actually, I would argue that once massive inflation hits, people are going to try and find any safe haven so relatively "safe" stocks are probably going to have a good time."

    Yes... And if you read my innuendo again... :) This is already happening and is WHY the stock market is going up.

  3. I wish my wife could understand the stupidity of taking a big loan at the moment... :/

  4. It really depends what you do with the money. If you tie it up in a loan for a house then it is a very very bad idea. If you loan money to buy a trip Costa Rica and then never comming back and ignoring the loan payments I think it is a hilarious and great idea!

  5. Actually, I would argue that in a VERY inflationary scenario - now is the time to get a fixed rate mortgage going way over your head - because inflation saves debtors and kills creditors.

    Also - I don't think people are running towards stocks because of inflation yet - but they will soon. I will point and laugh at anyone running into government bonds.

  6. You are wrong. As I have mentioned several times before, the inflatory money comes firstly to financial institutions and such which means that only the stock- and bond market are feeling its effects right now. The money hasn’t really reached the markets yet. This is around 50% of the raising of stock prices right now. Check who is buying, who is selling and which companies really are benefiting. The second big thing behind this is that fewer companies are pulling the weight of the others. Again, check the statistics. Compared with any other year the number of companies actually attracting investments (the primary ones) are much fewer in numbers hence investors are looking for sure bets. The final and smallest piece is the notion of positivism.

    And a fixed rate might save u time, it will not however be anything else than just that. Borrowing and spending right now is the worst thing you can ever do, at least if you tie it up in something.