Germany Falls into Recession • Hacker News Board

Re: Germany Falls into Recession

#41

Post by myth_drannon » Thu, May 25, 2023, 2:28 PM UTC

ccozan wrote: post #18

Actually the biggest blow was not the energy costs, but the interest rates. They went from 1-2% now at 4-5, even 6% for real-estate ( new building and old ) while the prices are still at last year level. For other types of financing, I had a "good" offer which went to 12% interest. I felt like in a 3rd world country. With such expensive money, nothing will be done. The construction economy is really going dow from mi…

Most countries raised interest rates to the same level but they are not in recessesion. I don't know what does it says about Germany's economy... At least in Canada I believe the recession was averted by increasing immigration.

Re: Germany Falls into Recession

#42

Post by ibejoeb » Thu, May 25, 2023, 2:28 PM UTC

Escapado wrote: post #30

ccozan wrote: post #18

Actually the biggest blow was not the energy costs, but the interest rates. They went from 1-2% now at 4-5, even 6% for real-estate ( new building and old ) while the prices are still at last year level. For other types of financing, I had a "good" offer which went to 12% interest. I felt like in a 3rd world country. With such expensive money, nothing will be done. The construction economy is really going dow from mi…

I had a brief interaction with a real estate agent a few months back and he told me they really have trouble selling houses now at those interest rates. The run on housing apparently has dialed back significantly. He also mentioned that he thinks in around 5 and 10 years time the market might be flooded with houses people bought at low interest rates because they will not be able to pay their mortgage at these new in…

Are adjustable-rate mortgages common in Germany?

Re: Germany Falls into Recession

#43

Post by nine_zeros » Thu, May 25, 2023, 2:29 PM UTC

mafribe wrote: post #26

ccozan wrote: post #18

Actually the biggest blow was not the energy costs, but the interest rates. They went from 1-2% now at 4-5, even 6% for real-estate ( new building and old ) while the prices are still at last year level. For other types of financing, I had a "good" offer which went to 12% interest. I felt like in a 3rd world country. With such expensive money, nothing will be done. The construction economy is really going dow from mi…

> money are kept by the people in banks and not released The banks will reinvest this money. (Cf Fractional-reserve banking).

> The banks will reinvest this money. (Cf Fractional-reserve banking).

Only if there is demand for the money at a high interest rate. The credit boom is dependent on the borrower as well.

Re: Germany Falls into Recession

#44

Post by londons_explore » Thu, May 25, 2023, 2:29 PM UTC

Escapado wrote: post #30

ccozan wrote: post #18

Actually the biggest blow was not the energy costs, but the interest rates. They went from 1-2% now at 4-5, even 6% for real-estate ( new building and old ) while the prices are still at last year level. For other types of financing, I had a "good" offer which went to 12% interest. I felt like in a 3rd world country. With such expensive money, nothing will be done. The construction economy is really going dow from mi…

I had a brief interaction with a real estate agent a few months back and he told me they really have trouble selling houses now at those interest rates. The run on housing apparently has dialed back significantly. He also mentioned that he thinks in around 5 and 10 years time the market might be flooded with houses people bought at low interest rates because they will not be able to pay their mortgage at these new in…

Interest rate guarantees last anywhere from 1 to 25 years. That means that in any given year, it is a pretty small chunk of the housing market which will see a change in rates.

Overall, that has a significant damping effect on the effects of changing interest rates.

Re: Germany Falls into Recession

#45

Post by myth_drannon » Thu, May 25, 2023, 2:29 PM UTC

onlyrealcuzzo wrote: post #38

Escapado wrote: post #30

Earlier quoted context omitted.

I had a brief interaction with a real estate agent a few months back and he told me they really have trouble selling houses now at those interest rates. The run on housing apparently has dialed back significantly. He also mentioned that he thinks in around 5 and 10 years time the market might be flooded with houses people bought at low interest rates because they will not be able to pay their mortgage at these new in…

If things continue, in 5-10 years, dollars will be worth 50 cents, and it should be MUCH easier to pay your mortgage. And, I'll eat my hat if we don't get back to ZIRP sometime in the next 10 years.

That's not going to happen, salaries are depressed and are not keeping up with inflation by a large margin.

Re: Germany Falls into Recession

#46

Post by runsWphotons » Thu, May 25, 2023, 2:30 PM UTC

ibejoeb wrote: post #42

Escapado wrote: post #30

Earlier quoted context omitted.

I had a brief interaction with a real estate agent a few months back and he told me they really have trouble selling houses now at those interest rates. The run on housing apparently has dialed back significantly. He also mentioned that he thinks in around 5 and 10 years time the market might be flooded with houses people bought at low interest rates because they will not be able to pay their mortgage at these new in…

Are adjustable-rate mortgages common in Germany?

They are normal basically everywhere but USA I think.

Re: Germany Falls into Recession

#47

Post by AzzieElbab » Thu, May 25, 2023, 2:31 PM UTC

myth_drannon wrote: post #41

ccozan wrote: post #18

Actually the biggest blow was not the energy costs, but the interest rates. They went from 1-2% now at 4-5, even 6% for real-estate ( new building and old ) while the prices are still at last year level. For other types of financing, I had a "good" offer which went to 12% interest. I felt like in a 3rd world country. With such expensive money, nothing will be done. The construction economy is really going dow from mi…

Most countries raised interest rates to the same level but they are not in recessesion. I don't know what does it says about Germany's economy... At least in Canada I believe the recession was averted by increasing immigration.

I hate to say it but give it a few months.

Re: Germany Falls into Recession

#48

Post by beambot » Thu, May 25, 2023, 2:31 PM UTC

worksonmine wrote: post #37

markus_zhang wrote: post #31

Earlier quoted context omitted.

The energy cost might be the cause of that interest rate though.

What correlation do you see to get to that conclusion?

Rates were raised to combat inflation.

Re: Germany Falls into Recession

#49

Post by dxuh » Thu, May 25, 2023, 2:32 PM UTC

ChuckNorris89 wrote: post #24

dunnonot wrote: post #22

Earlier quoted context omitted.

I think they didn't like hotlinking, but in 2015 there was a comic about (in german) hint: yes there was a typing error... (-; Comic: //i.ibb.co/ScZWgLt/938-ALLES-apr-15-FINAL-Mail.png regards...

Is there a TL;DR translation for the comic? I don't think I get the humour/point. All I understood is that the government and media are faking the inflation numbers to be lower than reality that people notice.

I don't think the comic is particularly insightful, but here is a translation. I tried to stay close to the original, but you might say some things a bit differently in English:

Title: Dishonest

Could you explain this to me? Government and media are talking about low inflation, but what I am seeing is that prices are exploding.

...they lie, by deliberately calculating incorrectly or sometimes even skipping details. The bad thing is,

it doesn't just happen here. Everywhere in the world all central banks seem to be doing it.

Through their dishonesty they give themselves more opportunities for influence..

...Balances are inflated..

...to trick a part of the population and to make them believe things would get better..

...while the standard of living is moving in another direction..

through highs and lows! You know that. You have to learn to talk to the subordinates to keep them optimistic...

Re: Germany Falls into Recession

#50

Post by candiodari » Thu, May 25, 2023, 2:34 PM UTC

hhvn wrote: post #40

onlyrealcuzzo wrote: post #38

Earlier quoted context omitted.

If things continue, in 5-10 years, dollars will be worth 50 cents, and it should be MUCH easier to pay your mortgage. And, I'll eat my hat if we don't get back to ZIRP sometime in the next 10 years.

Atleast for the past few decades, salaries have increased less than what's needed to compensate for the change of value of the currency. Meaning the amount you make each year will on average be worth less.

The loan amount, however, will stay contant.

Your pay goes up. It just goes up 4% per year, while inflation goes up 10%. This does mean your loan becomes 4% "less" per year. It's just Big Macs go up 6%, making your pay worth less Big Macs. But your pay still becomes worth more loan repayments. The big increase only applies to new loans.

I would also like to point out that at 4% per year pay increases, houses become worth that amount less per year, for the same dollar amount. That means they "drop" 20% in price over 5 years.