I have heard a lot of talks about this but if you have 30 HIVE / STEEM / Blurt in your account you probably have more skin in the game than these banks have on all the loans they have written the last 3 years. Since March of 2020 the reserve requirement has been 0%. That is right. To lend $8 Trillion dollars they don't need $0.0000001 to even back it. Is this even real life???????
Seems like a lot of countries are at 1% which seems super low. Morocco seems like the only other one at 0%
Mind Bender
So where this gets really weird to me is let's just say some guy who wants to buy a tract home in California and buys it for $950,000 for a poorly constructed cookie cutter toss up job. Well the bank can just pop that number up on the computer screen, direct those funds to the right place and they are in first position on that loan and they can hold it to get the money back with interest or resell the loan. It didn't cost them anything and they didn't have to leverage any existing money they had in the bank to get that so to me they have little to no risk.
What If He Doesn't Pay?
Keep trying to roll the back payments to the end of the loan or renegotiate the terms or something and if you have to foreclose, well they got real property from money they just popped up out of thin air on the computer screen.
Uncharted Territory?
It's really hard to dig tough all this stuff but one things is staying that the change that happened in March 2020 was for Net Transaction Accounts which are basically checking accounts. So it is hard to really understand what that means in my mind.
Would that apply to a loan given to you for a home where they funds show up in your checking account ready for you to wire to a title company?
Or will it more be an issue when things get tight and then you can't pull any cash money out of your own accounts? That already is an issue. Just try to pull $20,000 out and most of these branches barely have any money. I have done it before where I had to go around to 3 or 4 branches trying to get money out. It becomes this big ordeal. Very annoying.
I only keep enough money in the bank accounts to keep the wheels greased and the flow going.
The market is actively collapsing but we aren't hearing a lot about short sales or people being under water yet despite a lot of people really can't get out from under homes they bought in the last couple of years in some of these markets especially in California.
Markets in California, Phoenix, Las Vegas will typically lead the crash and I fully expect 50% reduction in price in markets like Phoenix and Tucson. I think we are going back to 2015 numbers in those markets but what if banks can just keep "working with the borrower?" and never really call these loans due because they have no skin in the game?
You guys saw me out there. I had boots on the ground. Everything was nuts and I was telling people that the economy was way worse than people were leading on. There weren't jobs in California. Then you see all these homes being built. It was insane. And you are thinking, "Who is buying these homes at these insane prices?" Starting from the $900s???? WTF
It's a mixed bag of data and how many people are flooding into the United States? Millions??? We really just don't know so it is hard to calculate how many houses and apartments will be vacant in the next six months to a year and how that will pull down the price of rent and then ultimately pull down the price of the homes.
To me all this looks like a repeat from the great recession. Everything has inflated but wages have lagged way behind.
The locals can't afford to live in their own cities.
At some point that becomes too big of a burden to manage. There are only so many hours in the day for a person to work. There are already so many people who have two jobs to try to get through.
Young Peter Schiff said something that I found interesting. I typically don't like his stuff because he calls for a crash everyday for 12 years and then when things pull back he points it out and says he called it. That being said he mentioned that inflation isn't going to go down. It might slow down at these rates and that we would have to raise interest rates higher than the inflation has been running at. So like 20% or 30% interest rates to really cut off inflation. I found that interesting and I see where he is coming from which would really clinch up the economy extremely hard.
Despite interest rates not being that high I still think the dominoes are starting to fall. Money isn't as cheap and a lot of the hiring has been cut back for these insanely high paid positions which causes a ripple effect. People are having to watch their spending and reaching the end of their credit lines. People are already tapped out and most buyers have left the building when it comes to these over heated real estate markets. Most people realize it isn't a good time to buy or just simply can't swing it.
Student Loan Crisis
$1.757 trillion student loan debt in the United States and Average student loan debt amount = $37,172. Average student loan payment = $393/month. 44.7 Million people with student loan debt.
The payments are on hold since the scamdemic began. What about when those start back up? I think what the Biden administration will try to do is kick the can down the road to 2024 to try to get past the elections.
That average payment of $393 / month will hit hard with all the other expenses going on. So many people won't have the money saved up for any of that. I can tell you that right now.
War in Ukraine
I really don't know what is going on with the whole thing. I wish people weren't fighting but they are. Biden keep pledging more and more money to it and has even said we are going to pay Ukrainians pension plans. Social Security will go bankrupt in less than 10 years and some how he is pledging to pay another countries pension plans and saying he is going to drop all this student loan debt up to $20,000. He just keeps saying all kinds of stuff.
I guess what we have put into it equates to approximately $140 / citizen but some of those citizens are children and not working age tax paying adults. Doesn't seems like much but it's really hard to say how long we will be fighting this proxy war with Russia and where this will lead to. I just wish no one was fighting over stuff to begin with.
AI Came At the Worse Time
Playing around with MidJourney I have been pretty blown away. I had it draw pictures of the California Dogecoin and it came up with that. Pretty freaking insane and I don't know how many months it would have taken me to try to create that myself. All these people working various jobs in computer graphics, development, law, and so many other things are going to end up in a situations where the only retention will be to become hyper efficient with the AI assist. Becoming masters of these tools to become 10 times more efficient. All these people in college right now have to feel like they are doing an insane amount of busy work and paying a lot to do it after seeing what AI is capable of.
During this contraction I expect a lot of organizations will keep cutting the fat and then cutting more and more fat and getting the remaining employees using hyper efficient machines and AI to do their work faster to remain competitive.
How many people are going to leave the US?
https://www.idealista.it/en/immobile/21374868/
48K EURO or basically $50,000 US??? Built in 2005. A little area for a garden. A gated parking area. I mean I haven't done all my research but let's just say it looks like in Southern Italy there are properties for under $100,000. Another blogger clued me in on more of these. I will have to find the original conversation but to be honest being this close to the Beach and just updating the place. It honestly doesn't seem like a bad deal compared to these insane prices in the United States and Canada.
Or you could be in a fully furnished Condo 5 minutes from the Beach in Montenegro for $125,000 Euro. That's approximately $132,000 US Dollars.
https://realting.com/property-for-sale/montenegro/amm-realty/1581815
That just looks like such a better deal than what you could get in Los Angeles or Miami. When I compare stuff to Miami it seems to be about 3 times more expensive on average. From everything I have researched with Montenegro I think that seems to be the safe bet. It is 1/3rd the cost for most things I see. Real estate, food, etc. I'm sure their economy has slowed up with this recession as well so more deal could pop up.
Personally I just think a lot of places in the US aren't a good value in comparison to other parts of the world.
It just seems like it might be smart to diversify and have properties in these different countries.
I just don't know exactly what is going to happen with the US market especially if they didn't really have to lever against any assets and everything is just popped out of thin air.
What do you guys think????? Will banks do constant loan mods and work with borrowers because they have no skin in the game or just go and foreclose on the temporary tenants that thought they "bought" something and then just sell that at auction and capture that work and redeploy the capital a million times over?