BJG88 – it is always oh-so-simple in the beginning:)

Remember the half life…. It WILL get you in the end:) or should that be

One of my favourite US quotes comes from the only person in the entire world who seems to think exactly like me – Jeremy Clarkson.

'I am sure, if you live in the mid west and eat grits for breakfast, the USA would be tailor made for you and a truly wonderful place to live. Unfortunately, I do not!'

OK Freckle, enough:

‘……China’s problem isn’t US consumption but shifting its economy from primarily export orientated to a more internal consumerist model. China has significant structural and debt problems to contend with and isn’t as healthy as many think. Growth is slowing and if China is to successfully restructure its economy into a more sustainable model it has to get growth down to around 3-5%. That’s a big problem for us but another story……’

I do not believe China is all that healthy at all – I would argue that anyone here is safer (not racing around NW WA and/or buying silver shares) than you have portrayed yourself to be.

The point in the paragraph above is exactly what I/we have pointed out. I have appreciated your input, but in real terms you are simply now requoting the gist of many other arguments and they are irrelevant to the discussion on this thread. We are here BECAUSE we basically agree with you – and we aren’t buying silver. Or selling it – as you should be:)

Freckle; I could write a near book on response, but the essence in relation to this subject is that most of these guys are buying property (as Jay has said) for cash.

None of the smart money here is doing anything other than hedging (though few with the space or ability to grow the size of hedge Jay has managed) so you are preaching to the converted in most cases.

I still don’t think you are quite getting the ‘cash’ component of this market. On the one hand you are quoting billions of loans and on the other saying millions of houses in foreclosure. I get the point but buying houses for cash is non derivative – by definition.

Localising the unfinished global finance issue (agreed yet to be played out) to the US, I argue that a ‘normal’ response to massive amounts of cash being sent to banks would be inflationary. The banks paid the Fed back. I don’t like the reasons they did it, but did it they did:) In this case the Fed -wanted- inflation, but the money did not get into the system where it was wanted. Hence QE.

It is a highly complex arrangement US debt and there are as many economists/financial historians as there are opinions. The US can support itself (if you reduce the crippling social security/health care payouts) easily with the aid of China. China is as desperate for the US to consume as the US consumer is. China is also still buying Greek bonds I understand for much the same reasons. It has no domestic consumer market to feed its economy so it needs exports. Exports come at a cost….

All this gets away from the point of this discussion. CASH is being paid for homes. There are no loans on this stuff, excluding a few hard money guys and Aussie LOC’s etc. Buy in a good area with guaranteed tenant and you cannot get a safer investment from a GFC point of view. In fact I would suggest that almost everyone here is buying this stuff _because_ of their desire to hedge. To argue a worse scenario than has already been played out in the US is to argue social breakdown. If that happens we get Kyler with his hollow points and head up to the big hedge at Jay’s:)

kylermrice wrote:

Enter a young Kyler on his way to 1000 doors who will relieve them of their worries for pennies in the dollar:)

I'm probably one of the youngest investors on here (that is doing well, no comment on the 23 year old with the horror stories in AZ) and I'll gladly keep taking the pennies on the dollar deals.

I am sure she has horror stories in the myriad of other places she has ‘invested’ in as well – just doesn’t know about them yet:)

Right place, right age, right attitude, right skills – you are going to kill it Kyler, keep it up!!

Never let it be said we think for ourselves Kyler:) Absolutely no room in this market for contrarian investing. I guess the more familiar a US city is familiar with Aussie foibles the better:)

ATL properties are ‘pretty’ and the place has visual similarities to bits of Oz – people also have a fetish for high headline returns so it fits the bill. My sister (emma171) said to me last night she reckons you have to buy $20-30k (thereabouts) less in ATL compared to a place like LAS to make up for the extra maintenance (lawns, termites etc). Interesting point.

As long as you stay away from HOA’s you should be fine. Then all you have to do is manage the place – and we all know how easy that is:)

What he said:)

The more you get to know the US the more weird it is. It is so familiar, but it isn’t. Buzzer is doing everything correctly. What is scary is people who buy without having the first hand experience Buzzer is getting – you WILL lose money if you do not understand what it is you are dealing with.

PS: I am not in any way Anti-USA.

On the US banking insanity. I have had the same BofA account since 1998. I have a note owed to me every month and have done for the last 4 years. No auto debit/payments, so there is this guy whose job it is to bank my cheque each month. Physically!! And he does 600 others, each month! Great job:). I just got an email from him saying that BofA have returned the last THREE payments as they are under the impression my bank acct with them has been closed. It wasn’t the day before yesterday when I was in LA and deposited $15k and withdrew $3k, but this is exactly the crazy stuff that infuriates me about the US banking system. It just SHOULD NOT HAPPEN!!!

Money is not being printed, it is being sold to banks at low rates to stimulate borrowing. It is a subtle but very important difference. I get the point you are making, but your explanation is lacking. From the US housing perspective the points you highlight above are extremely relevant. Nothing supported the prices that have been achieved in those 70%/4% pockets, it was raw capitilsm. Take a ‘non foreclosure’ suburb – say where Freckle Senior has been living in a mortgage free house for 30+ years. The only reason he would really care about a further collapse is if the country entered a post apocalyptic era like Mad Max – which didn’t even come close in the depression. There is an outstanding Paul Barry 4corners docco from the early ’90’s that is available online that outlines what you are getting at, but if you are buying assets for cash in a raw capitalist state with real income attached you are as far from the world of the financial alchemist as you can get. I hasten to add that I am not, but I am moving in that direction. I would suggest the mining industry is far more risky than the isolated and population backed properties the guys here are generally buying.

I guess you are alluding to something I think of as a derivative bubble. It will be interesting to watch, but I think you might be looking at this backwards. The US housing market has been (as far as it is possible to be) ‘cleaned’ of almost every derivative it created. For that reason I see it as insulated (again as far as possible and certainly compared to almost anything else I can think of) and therefore ‘safe’ – or at least ‘safer’ than any other market you could name – assuming you can buy something without being ripped off and actually manage the thing properly.

You must get away from the simplistic journalist line of ‘printing money’. Money was thrown at banks to hopefully get it into the system. They basically paid it all back to keep the Feds out of their pockets. The Fed response was then to ‘print money’ which was simply to sell bonds at low rates, which then allows banks to on loan the money at ‘attractive’ rates to get the economy moving again.

Sovereign debt is a very big issue, surely there is a finite amount of money that is possible to be created, but if anything is ‘safe’ I would think it it is the stuff that is being discussed here.

See Jay, again its Australians (or kiwi’s) not being used to scale:) 300acres of Fir trees is a lot of timber, but looking at it another way it is just a very big untrimmed hedge – in the trues sense of the word:)

I look forward to googling your paddock – it is absolutely stunning country up there. You are very fortunate – enjoy it !!