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Market meltdown...?!

Discussion in 'General Yachting Discussion' started by airship, Feb 27, 2007.

  1. airship

    airship Senior Member

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    The Dow Jones was quoted down 507.99 points, or 4%, at 12,124.27 in late afternoon trading on Wall Street, the FTSE 100 closed on a fall of 2.3%, or 148.6 points, to 6,286.1.

    All sparked off by a near-9% slide on the Shanghai Composite Index...

    Reminds me of tech stocks, the NASDAQ plummet and general downturn in early 2001.

    Which freed up quite a few megayacht building slots here and there back then. Or at least, the opportunity to finish "nearly-completed newbuilds".

    Are we up for a repeat performance, or worse...?!

    PS. I've stocked up on candles and petfood - enough to last 7-10 days...!
  2. Codger

    Codger YF Wisdom Dept.

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    China is trying to slow things down a bit. They took a whack of of government owned companies and sold them in to the market. Not all that different a scenario from what happened in the former Soviet Union when many state owned companies were made private.
    The Chinese economy is just a bit overheated and needs a little cooling off.
    Their trade surplus with the rest of the world is up over 60% year to date over the same period last year. That kind of growth is just not manageable for any period of time.
  3. AMG

    AMG YF Moderator

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    It could be the other way, people are cashing in after a long upturn, about 100% in Shanghai the last year? And while the stock market stagnate the guys are buying yachts to have some fun for their profits... :)
  4. K1W1

    K1W1 Senior Member

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    Hi,

    I saw a bit on this on the BBC this morning.

    It was saying that in China it is not uncommon for people to mortgage their houses even to invest the money even though it is illegal.

    They went on to say that there is a Government sponsored move to try and stop this underway now which is what caused the slide. Whether this is selling off state owned enterprises or not I don't know that was not reported in the news this morning.
  5. Codger

    Codger YF Wisdom Dept.

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    By "privatising" so much over the past few years it created many more opportunities for the small investor. Putting those opportunities in front of a population with an inclination towards gambling and no recent history of how a capital market works got a lot of people involved that perhaps should not be. I've been in and out of that market a few times but getting solid information can be difficult. Most mature markets have a ton of regulations covering financial transactions. China, like the old Soviet Union, is just learning to build the required regulations.
    As to people taking out mortgages to "play" the market, try and get your head around just how easy it is to get multiple mortgages on the same property with none of the lenders being able to reliably find out about the other mortgages or in some places really nail down who actually has title to the property. There is also a well developed “secondary” economy that performed many of the services not officially available prior to the recent changes.
    They’re just figuring out some of the pitfalls but they’ll straighten out what they need to.
  6. OutMyWindow

    OutMyWindow Senior Member

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    Not sure what type of "registry" system China uses, but in any Commonwealth Country this practice would be impossible.

    British Columbia uses a Torrens System, modeled after the ship registry system devised by Robert Torrens. In the Torrens System, a purchaser does not need to search back through each previous transfer. Instead, the purchaser can rely on whatever name shows on the Land Title Registry. If the Land Title Registry shows a person as the owner or a Financial institution holding a lean against the property such as a Mortgage, the purchaser can buy the property from that owner without worrying about how that person became the owner, or being worried about hidden leans.

    The Torrens Land Title Registration System provides a sure method for determining and assuring title to land. Under a Torrens System, security of title is based on the four principles of indefeasibility, registration, abolition of notice and assurance.

    Since China has been posting double digit market gains for the last 4-5 years a correction is only expected, what was unexpected was the world's reaction to it. It just shows how everyone is on edge.
    The one that most people in North America are watching and the Bulls/Bears worried about is the unprecedented annual double digit real estate market surge, and how it's predicted correction or bubble burst will affect the economy as a whole.
  7. Codger

    Codger YF Wisdom Dept.

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    Our system is not foolproof either. There is a reason that a product generally called "Title Insurance" is on the market.
    Anyway, China holds about a trillion dollars worth of US paper so they're in pretty good shape although I don't know what percentage they've converted to or backed up with Euros.
    There's only one guarantee when it comes to the markets for any commodity be it steel, money or pork bellies. They fluctuate. :D
    Those that believe that just because a market has shown consistent growth over a period of time so it will continue to grow at the same rate are delusional.
  8. OutMyWindow

    OutMyWindow Senior Member

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    Just to clarify, “title insurance” came about through Identity theft.
    Unscrupulous people find clear title properties, assume that persons identity and register mortgages against the subject property without the knowledge of the true owner.
    There was a recent case in Ontario where the Bank demanded payment on the fraudulently registered mortgage from the true property owner, but the Court struck it down and the Bank took the loss.
    (I hope I’m not giving anybody ideas).:)
  9. Loren Schweizer

    Loren Schweizer YF Associate Writer

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    Codger definitely has the proper handle on this 'hiccup'.

    How else does one achieve the pinnacle of the Dep't. of Wisdom?

    From the retail world, there is usually an upswing of boat deals when the market tanks... not from 'Joe Six-Pack', necessarily, but from the guy/gal who figures out a new deployment of assets.
    Besides being easier to say, 'yachts' are a lot more entertaining than, say, convertible debentures.

    And, in four months time, this current market drop gets lost in the wash, anyhoo.
  10. Codger

    Codger YF Wisdom Dept.

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    "How else does one achieve the pinnacle of the Dep't. of Wisdom?"

    Beats me. I hadn't noticed until you pointed it out. Just a dumb ol' machinist still trying to figure out if I ought to buy a boat. :)

    This gets sent to me at least once a month by off continentals (other than North Americans) that believe I should leave here.
    http://www.brillig.com/debt_clock/
    What I keep pointing out to them is that as the US$ devalues the actual real value of the payback is in the US's favour. Of course the number is getting fairly large but relative to GNP and total value of all US assets it's not really as crazy as it looks. If I owed that much there isn't a banker on the planet that would dare try and pull a number on me. Very happy that I'm not the Chinese holding that amount of paper.:D
  11. Codger

    Codger YF Wisdom Dept.

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    There have also been instances of title transfers being registered fraudulently in at least two jurisdictions that I'm aware of. Anyway, it's not a problem here on the scale that it is in some other countries.
  12. airship

    airship Senior Member

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    I believe a little Bruce Springsteen is in order: I'm goin' down, down, down...

    According to some news reports, the UK's FTSE100 index alone saw £55 billion wiped off companies' values on day #1. That's almost $108 billion! Using the old adage of $1 million per metre length for a superyacht, that's the equivalent of an incredible superyacht 108km (or 72 miles) long...?! Think about it, that's like 1,000 Lady Mouras with enough spare for some decent-sized tenders... :eek:

    All things considered, what with the scarcity of berths for superyachts in the major cruising areas these days, this correction which might in fact become a downturn or even recession, is probably a good thang...?!
  13. OutMyWindow

    OutMyWindow Senior Member

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    Not wanting to get caught in a market downturn like I did in 1991.
    I have decided to take the initiative, with the knowledge that the Sky will be falling; I shifted all my assets towards the umbrella industry.

    Like the WHO sang....."I won't get fooled again" :rolleyes:
  14. Codger

    Codger YF Wisdom Dept.

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  15. MaxResolution

    MaxResolution Senior Member

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    Carry Trade?

    How about the Americans, simply fearful of the .5% prime hike on the Yen, who know even less about the global volatility in the $500T deravitives market, than they know about the real politics behind the Reagan/Leo Wanta inititive that actually caused the Soviet slide?
  16. MaxResolution

    MaxResolution Senior Member

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    Can you spell derivatives?

    I love market volatility. For us po'-folks it just comes with the turf! By this time next week I'd love to see half the yuppies on Wall St. sporting fresh 'Britney Spears' hairdoos.

    As I see it, your last sure bet was in back in May; Gold at $551./ Silver $11.20 or so, before Helicopter Ben came in to work his inflationary magic. After which, your only currency safe-haven was to float your money in a boat!

    Speaking of transparency, here's a story that is sure to enlighten you on metals futures.
    "Zimbabwe gold miner says on brink of collapse" http://za.today.reuters.com/news/ne...28_RTRIDST_0_OZABS-ZIMBABWE-GOLD-20070302.XML

    BTW, anybody got snapshots of Mugabe's private yacht(s)?
  17. OutMyWindow

    OutMyWindow Senior Member

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    So true Codger, just to shine a light on our "micro market":

    -Starter condos downtown are $600-$700 per square foot
    -High end; North False Creek & Coal Harbour is $1,000 -$1,200 per square foot
    -Banks are providing 100% financing to first time home buyers
    -Double digit gains over the last 4 years

    It's a house of cards. Not if but when, will be undergo the market collapse that certain American cities are/have experienced recently.
  18. Codger

    Codger YF Wisdom Dept.

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    outmywindow
    We purchased half a dozen houses in Calgary back in 00/01. 1100/1300 square foot places close to the airport for our guys to stay in when they went there. We just bought them because the guys asked for it and having done those years where I spent upwards of 250 nights a year in hotels I saw where they were coming from. We paid 110/135k a piece and furnished them from Ikea. Turned out that we were ahead of the game since it cut the hotel bills in Calgary by half. Also zero damage bills since the places were treated as homes rather than just another poshed up $150/night cell.
    These are all paid off so there are no assumable mortgages. Despite that, in q3/q4 last year we were deluged with unsolicited offers ranging from 230 to 265K a piece. I can tell you for a fact that wages in that area have not more than doubled in that 5 year period so something is seriously wrong with the picture. What happened to the rule about not spending more than 25% of your disposable income on shelter?
    The strange part of this is that Calgary gets most of it's water from a glacier that is melting away at a significant rate. I like to play with the possible scenarios of what will happen when that glacier is gone in 15-20 years and there are all these houses on 20-30 year mortgages.:(
  19. OutMyWindow

    OutMyWindow Senior Member

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    I’m surprised that your houses have only doubled in the last 6 years; I would of thought triple at least. (maybe get an independent appraisal if your considering selling).
    The Banks allow 45% of total gross income to go towards mortgage and taxes, although with today’s west coast prices the actual figure needed has been more like 60-75% of income.
    Our West Coast (Vancouver) market is based on “speculation” and without too much substance, other than it’s a very nice place to live.
    I don’t think I would worry about Calgary to much, after-all it’s the new Houston / Texas of North America with the Tar Sands and Corporate Headquarters for energy companies.
    Look at the prosperity of Las Vegas in relation to water shortage, hey, if it becomes a problem, they can build a pipeline and have some of ours here on the “wet coast”.
  20. MaxResolution

    MaxResolution Senior Member

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    Disasters r us

    -120 DJA at the bell! Now, anticipate a minor up-tick through the day on Monday, and Black Tuesday here we come. I'ts 1929, as history repeats itself...

    But seriously, we know the stock market will never crash because that's what we learned in high school. Obviously, with over 20 new condo-skyscrapers underway in Miami, somebody anticipates a deluge of cash rich buyers. Never mind the death of Ford, GM and Chrysler, South Florida will continue to buck the trend for quite some time. Boating sector production now outpaces tourism. Like I said, a mega-yacht is better than a land-bank and far less volatile than gold.

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