House Sales & prices.

Kia Ora,

Well an interesting few days. The markets are down. US dollar was up & although gold fell on at least one day it stayed in line with the US dollar.

The lastest from the US is that house prices are falling & so are sales. In Australia they are sky rocketing up & in NZ prices are rising but sales are falling.

What does this mean? Well the US sales had risen due to the stimulus but now the steam has run out. They are trying to get things going again by leaving interest rates low. Couple it with rising job losses, it has being pointed out that in the US there has not being an actual rise in number of jobs since 2000, it means there are millions just holding onto their homes who will loose them for sure if interest rates go up forcing the mortgage rates to rise.

There has being reported cases of US judges reverting to what happened in the 30's where people had defaulted on their property payments, but being allowed to stay.

There has also being a big jump in credit default swaps as the potential for sovereign debt crisises increase.

What are credit default swaps? Insurance. They are what AIG insured the banks for all those dodgy subprime loans & why it got such a big Bail out because had it falied the whole banking system would of failed & now the same insurance is being offerd to countries who have montary issues. In particular those of the EU who have no real control over their finances. Or in other words unlike the US & Britain they can't print money to pay their people stimulus.

Although the stimulus doesn't help as just in the end creates more of the same.

The stimulus could actually do what Japans did. Stagnate their economy for 20 years, but there are signs it could turn, initially some predict going deflationary as US is threatening to do again now the stimulus has run out of steam, then due to the amount of money the Japanese governments have printed over that 20 years to stimulate the economy go into hyperinflation.

Of course the US is trying to stop that, by easing off the stimulus, but without the banks lending there are no new jobs & therefore less spending, so the economy will go into deflation.

With 'Helicopter Ben' about to be reconfirmed as the head of the Federal Reserve you could almost bet on him then throwing more money at the problem. After all he is a professor who has studied the last depression & he knows how to stop it.

But then is he there because the power behind the power want hyperinflation to transfer the wealth to them?