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The Shock of Sweden's Housing Market Is Hitting the Country's Currency

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Re: The Shock of Sweden's Housing Market Is Hitting the Country's Currency

#371

Post by nerfhammer »

tjoff wrote: post #354
sliverstorm wrote: post #168

Earlier quoted context omitted.

If you want to go on vacation, but you can go on a little bit of a nicer vacation if you wait until next spring... If your old washing machine still mostly works, the new one will be cheaper if you can get the old one to limp along for a while longer... People don't completely stop buying things; life must go on. But people would start to drag out purchases where ever they can. Have you ever put off buying a computer…

Yeah, let's hold up the vacation so that we can get that airport sandwich for free. I don't even think people have a grasp of the effects on inflation/deflation in practice anyway, let alone suddenly make strategic decisions upon it.

Different types of goods are affected differently. Groceries aren't affected at all, but for large purchases there is empirical evidence that expectations of deflation lead to a general decrease in spending:

e.g. https://www.dallasfed.org/assets/documents/institute/wpapers... , http://www.tandfonline.com/doi/abs/10.1080/13504851.2015.110...

Re: The Shock of Sweden's Housing Market Is Hitting the Country's Currency

#372

Post by littlestymaar »

opportune wrote: post #345
littlestymaar wrote: post #300

Earlier quoted context omitted.

> Either politicians are stupid, or more likely, they know that "homeowner policy" like this can make them and their other rich buddies even richer. It's not a malice vs idiocy situation, actually there is a third explaination : economy needs a growing money supply to work properly (and the money creation need to compensate the economic growth AND the reduction of money velocity[1]). But since the late seventies, mon…

Very good point. My pet theory is that the emphasis on asset-ownership as a means of retirement is what is decreasing the velocity of money. For example, let's say we had a system where instead of purchasing a home/stocks/bonds to save for retirement, you could instead pay the government $X which essentially goes toward an annuity with payout determined by the age at which you retire. The government could just immedi…

That's an interesting point, and easily challenged since my country (France) is actually doing what you suggest. And as a matter of fact, retirement here is part of the social security system (La sécurité sociale). I'll check if we see the same kind of slowdown of money during the past decades here.

I have two personal pet theories (is that really a common idiom in english ? I like it !) on that topic.

1. since we now focus on low inflation, people have little incentive to spend/invest their money, they can just hoard cash for a long time with no risk of losing money.

2. The low imposition rate since Reagan accelerate the concentration of capital, and rich people buy assets with their money, not consuption goods.

Re: The Shock of Sweden's Housing Market Is Hitting the Country's Currency

#373

Post by littlestymaar »

dredmorbius wrote: post #365
hackerguy99 wrote: post #334

Earlier quoted context omitted.

How else can money be created except through credit?

And what prevents the arbitrary extension of credit? The present primary reliance on fractional reserve monetary is not a carved-in-stone requirement of financial systems, only the present norm. If you're interested in ideas and thoughts on money, I'd suggest William Stanley Jevons writing as a starting point for modern views. A. Mitchell Innis's "What is Money?" (1913) is not entirely mainstream, but strikes me as a…

> The present primary reliance on fractional reserve monetary is not a carved-in-stone requirement of financial systems, only the present norm.

Their is no fractionnal reserve banking in the modern world anymore. And circa 2007, virtually nothing prevented the infinit expansion of credit, with the result we all know.

If you want to learn more about these topics, the keen-krugman debate (more of a controversy than a civil debate) a few years ago was really enlightening.

Re: The Shock of Sweden's Housing Market Is Hitting the Country's Currency

#374

Post by nisse72 »

nikanj wrote: post #282
lg wrote: post #68

Earlier quoted context omitted.

> Also in Sweden for apartments, you don't own it. Most apartments for sale is so called "Bostadsrätter" which means you own a percentage of the association that owns the apartment building(s). If the association/organization has a bad economy and can't pay the debt they could be forced to sell the entire apartment building(s) and you'd loose your apartment while still having a loan to the bank. In the US we call the…

The Swedish system sounds closer to a strata system https://en.wikipedia.org/wiki/Strata_title

It's not actually. Unlike strata, in a Swedish "Brf" you don't actually hold title to any real estate.

As the GP says, you own a share in a co-op that itself owns the real estate, and that gives you the right to use the apartment that corresponds to your share.

Something similar to strata title has been discussed for many years in Sweden: ägarlägenheter. I don't know whether anything has ever come of it, however.

Re: The Shock of Sweden's Housing Market Is Hitting the Country's Currency

#375

Post by shostack »

mbesto wrote: post #313
thescriptkiddie wrote: post #301

Earlier quoted context omitted.

>> 3. Higher property taxes >Yes, this is a bitch in CA...see next point. Property taxes in CA are extremely low. https://en.wikipedia.org/wiki/California_Proposition_13_(197...

That's not the parent's point. If I buy a $1M home in CA 10 years ago and I pay 1% in taxes then and the house is worth $2M 10 years later, I don't get charged 1% of $2M after 10 years. I get charged a marginal increase ever year and this increase isn't based on market norms (I forget what the actual # is, but it would be like paying 1% of $1.25M). This means, if I sell my $2M house after 10 years), and buy another $…

Depending on your age, you may be able to not get dinged with the new home's taxed value.[1]

[1] http://www.boe.ca.gov/proptaxes/faqs/propositions60_90.htm

Re: The Shock of Sweden's Housing Market Is Hitting the Country's Currency

#376

Post by r00fus »

lisper wrote: post #107
opportune wrote: post #14

When will we learn that a "strong" housing market is not necessarily a good thing? High housing prices are great for those who already owned houses but terrible for everyone else (e.g. the entire generations born after prices became inflated). Not to mention people are greedy and will over leverage themselves when interest rates are good. No country should let the "landed gentry" hold them hostage over interest rates…

> High housing prices are great for those who already owned houses Not really. Rising prices (not high prices) are great for people holding houses as investments . But for owner-occupied houses, rising prices are as bad for the owners as they are for everyone else. my wife and I own a house in Northern California, which we bought during the sub-prime crash. Since then it has nearly doubled in price. It is also too bi…

Rent it and use the rental income to establish finance for the 2nd house.

Re: The Shock of Sweden's Housing Market Is Hitting the Country's Currency

#377

Post by littlestymaar »

rileyphone wrote: post #341
hackerguy99 wrote: post #334

Earlier quoted context omitted.

How else can money be created except through credit?

Via being backed to some tangible good, eg gold.

Or bitcoin ! Wait, this is ridiculous we have like two centuries showing us that commodity currency is a failure in an industrial economy.

Re: The Shock of Sweden's Housing Market Is Hitting the Country's Currency

#378

Post by grouseway »

stuxnet79 wrote: post #274
grouseway wrote: post #201

Earlier quoted context omitted.

Canada has no capital gains tax on housing and it has similar housing inflation to Sweden. I would say people are frantic to buy a home in Canada because it's tax free and the alternative (stocks/bonds/etc..) isn't.

Is this really true?? I think if you are selling a home that is not your primary residence then there is some sort of tax but I'm not 100% sure of the details.

It's true for the primary residence.

For secondary properties most people are just going to move in for 2 years to meet the requirement.

Re: The Shock of Sweden's Housing Market Is Hitting the Country's Currency

#379

Post by littlestymaar »

badestrand wrote: post #346
littlestymaar wrote: post #340

Earlier quoted context omitted.

Direct reserve emission by the central bank. In practice, the central bank can just give some reserve to the governement account.

..or they can give it directly to people. There is an initiative for Europe that wants exactly that, Quantitive Easing for People. I love the idea and am sure it would do more for the economy than just pushing banks to lend more money.

That could be a good idea, even though we don't really know the impact it will have on inflation. Imho, the impact would be close to zero in nowadays economy where the lack of demand is much more of a problem than an hypothetical shortage of goods. In the long run though, the demand would catch up and the supply could be the limit, like it was after the first oil crisis.

Personnally, I'd rather give the money to the governement like we did in the keynesian golden age, because it fuels the development of infrastructures, housing and social security. And at our point in history, it could be used to transition to a sustainable society. But that's because I don't trust the market on this, I'm kind of a socialist.

> am sure it would do more for the economy than just pushing banks to lend more money.

This is such a failure (esp. in the EU) I don't see how I could disagree with you on this.

Re: The Shock of Sweden's Housing Market Is Hitting the Country's Currency

#380

Post by natslovR »

badestrand wrote: post #346
littlestymaar wrote: post #340

Earlier quoted context omitted.

Direct reserve emission by the central bank. In practice, the central bank can just give some reserve to the governement account.

..or they can give it directly to people. There is an initiative for Europe that wants exactly that, Quantitive Easing for People. I love the idea and am sure it would do more for the economy than just pushing banks to lend more money.

They did it in Australia during the GFC. Spent 10 billion dollars giving 12 million people $900 each.

Share market jumped, retailers rolled out significant sales. People bought TVs.

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