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Goldman's new money machine: warehouses

reuters.com

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Re: Goldman's new money machine: warehouses

#81

Post by justsee »

cletus wrote: post #49
justsee wrote: post #38

Earlier quoted context omitted.

Why do you assert that Australia "didn't have the bubble in real estate prices that the US did"? We have a significant asset bubble here. It hasn't popped primarily because we've had government-sponsored inflation of prices via the First Home Owner's Grant. The unwinding of the asset bubble finally seems to be happening in Australia now and will trigger many of the same financial issues for our banks (for instance Co…

You're either understating (or simply unaware of) the extent of the real estate bubble in the US or you're overstating that bubble in Australia (or both). To suggest the FHOG (which is $7,000 now and only ever got as high as $14,000) is responsible for this is disingenuous at best. What's your argument for this? There are two basic components in house prices: the cost of land and the cost of construction. Land is ess…

I'm completely aware of the extent of both the US and UK housing bubbles.

It seems you're very unaware of the extent of the Australian housing bubble, and yet at the same time illustrate in your comment just how expensive Australian real estate is (compared even to Manhattan).

The Economist stated earlier this year that Australian property is now the most overvalued in the world, at 56% : http://www.smh.com.au/business/aussie-home-prices-worlds-mos...

The internet is awash with plenty of detailed analysis of the impact of the FHOG on the Australian market. For instance one article talks about one of the two main drivers of the Australian bubble: "a government sector that has (to some extent unwittingly) used asset price manipulation as a cheap means to stimulate the economy". It provides a chart illustrating the impact of FHOG: http://is.gd/CckGAV

You can read that particular article here: http://www.businessspectator.com.au/bs.nsf/Article/property-.... As to the FHOG being only $7000 ( and at its peak was actually $21 000, not $14 000), the article points out that $7 000 becomes $50 000 thanks to loan-to-value ratios.

Even people with a vested interest in pushing Australian property are starting to give up their usually preposterous arguments (that we have a housing shortage, that we don't offer non-recourse loans like in the US etc) and admit that Australian property is destined to fall for the next few years.

Re: Goldman's new money machine: warehouses

#82

Post by joezydeco »

fleitz wrote: post #11
lawnchair_larry wrote: post #3

Goldman is the great american bubble machine, and it's disgusting. "From tech stocks to high gas prices, Goldman Sachs has engineered every major market manipulation since the Great Depression -- and they're about to do it again" http://www.rollingstone.com/politics/news/the-great-american...

Goldman is good but not THAT good. If Goldman knew everything why would anyone take their iBanking elsewhere?

Try investing $1,000 with Goldman and asking if you can get in on the next IPO.

You'll find out that the Goldman you're using is not the same Goldman that the elite have access to.

Re: Goldman's new money machine: warehouses

#83

Post by dman »

yummyfajitas wrote: post #71
potatolicious wrote: post #24

Earlier quoted context omitted.

Ah yes, you're right of course - there is no objective measure of the balance of good and evil. What I do does eliminate jobs. Does the benefit to everyone else outweigh the loss of these jobs? Many people would say yes, some would say no. Some job eliminations open the door for more jobs - for different people. Does this balance the morality of putting people out of work? I don't know. Nobody does. But there is some…

The artificial supply squeeze on industries benefits... what exactly, besides Goldman itself? If aluminum becomes more scarce in the future (Goldman seems to be betting that it will be), then Goldman has done us all a favor by conserving it in the present. If it is not more scarce in the future, then Goldman will lose money.

In an ideal scenario that is what would happen. Unfortunately the invisible hand of adam is now tied behind his back. When 2008-2009 happened I was mildly optimistic that a new kind of finance firm would emerge - one which would use technology more intelligently, have a lower cost structure by virtue of having no bad assets on their books and one that would accept lower margins in order to make a headstart against established firms. In a well functioning market that is what would have happened - established players who got it wrong would have gone out of business leaving room for newer younger firms to spring up and do things in a better way. I still cannot place my finger on what exactly broke but the deadwood does not seem to burn in forest fires anymore.

Re: Goldman's new money machine: warehouses

#84

Post by anamax »

cletus wrote: post #8

Investment banks do provide valuable services: market making (providing liquidity in many markets), capital raising, the creation of financial instruments so investors can hedge against certain kinds of risk and so on. Unfortunately I think we're reaching the point of banks overstepping their bounds and creating far more problems than they really should. This strategy seems similar to the "demand shock" approach they…

> In Australia we have a strict financial regulation regime, arguably too strict in some cases, but we didn't have the bubble in real estate prices that the US did. "No doc" and "low doc" lending never reached the point of collapsing the market.

The "no doc" and "low doc" lending was "encouraged" by US govt regulation, specifically "if you're not loaning enough money to {the disadvantaged}, we're going to shut you down". Meanwhile, the "govt sponsored enterprises" that ran the secondary market for mortgages were buying portfolios of crap and lying about it. The latter meant that no one knew how much crap was in the market.

> Combine this with Federal government bailouts and investment bankers seem to act with complete impunity with regards to risk.

Of course they're going to bail out their buddies, future employers, and campaign funders (I'm talking about Obama here).

> Much like a law firm, the partners are personally liable for losses.

Partners at major law firms are NOT personally liable. They've all moved to LLPs and the like.

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