Originally Posted by tisonlyi

buying property now...

*slaps head*

Seriously, gents. I'm a layman... maybe that's a disadvantage, maybe not. I've no skin in the game, so to speak.

I realised the debt monster was out of control in the uk about 6 years ago... It wasn't through any in-depth looking at figures, it was looking at what surrounded me. zero down payment mortgages without almost no questions asked, the tv ONLY advertising consolidation loans, refinancing of mortgages, credit cards, fresh unsecured loans, insurances, etc... People earning little over minimum wage (somewhere between 7.50 and 11 $/hr) having new cars every year, buying houses left and right, credit cards everywhere... I couldn't believe it.

Then I looked around. Maybe I was wrong. Maybe there were sound principals for why this was happening... I found no such justification.

Look at the LONG TERM, like 20 year, TRENDS for house prices. that's where they're going down to unless there's full scale nationalisation of banks, plus full-scale regulation of prices for property. It happened in Sweden in the early nineties. The banks have since been sold back into the private sector, but the price controls remain (as far as people I know who live there tell me).

If house prices go back to 10-20% down, 3x double income prices, then most banks are screwed, even after this bailout. Commercial real estate loans are only just showing. Option ARM's, etc are starting to reset now and will continue through to 2011. If house prices go back down 10-20% down and a single income... woah...

There are NO solvent banks. The govt cannot save them, only delay the inevitable.

Mr Margin has called the hedge funds and they've repatriated their dollars, hence the upward trend of the dollar and collapse in stock markets. That's ending atm.

International trade is dying, and so demand for dollars.

The usual market for US debt is gone. China won't be trading so much with you, and thus not have so many dollars to recycle. added to that, they'll be spending dollars to buy materials to fund their programs of internal demand stimulus.

Who will buy US treasuries now? Japan? No. China? No way. Petros? Have you seen the drop in price? (plus the petros are looking to stimulate demand at home much like the chinese) I mean... The UK holds the 3rd largest foreign total of US treasuries. somewhere not far below $400bn... I don't think we'll be buying any of your fine dollars anytime soon, if we can get away with it...

How to finance the spending then? (it's up to around $8tn dollars atm...)

Monetizing debt.

End.

Seriously, gents... Unless you see some way out of this for the dollar, get the hell out of that currency. NOW, while it has some strength.