Monday 19 December 2011

Euro Collapse Crisis Sledgehammer Pounds Into Stock Market Santa Rally

The Market Oracle Newsletter
December 18th, 2011            Issue #25 Vol. 5

Commodities Currencies Economics Housing Market Interest Rates Education Personal Finance Stocks / Financials Real Gems

Euro Collapse Crisis Sledgehammer Pounds Into Stock Market Santa Rally

Stocks Stealth Bull Market 2011 Ebook Direct Download Link (PDF 2.8m/b)

Interest Rate Mega-Trend Ebook Direct Download Link (PDF 2.3m/b)

Inflation Mega-Trend Ebook Direct Download Link (PDF 3.2m/b)

Dear Reader

Santa's Late! The stock market as measured by the DJIA closed the week down at 11,866, showing significant deviation from the santa rally script with barely a week remaining, the lack of progress to the upside has been as a consequences of the increasing mass of unserviceable debt out of the euro-zone where politicians repeatedly show themselves to be ignorant of the facts and what to do to get out of the hole that the euro-zone is sinking deeper into an economic depression each day.

The euro-zone politicians appear single mindedly determined to do absolutely NOTHING to save the euro-zone, which is the reason why the bulk of my analysis and articles of the past 6 months has been centred around the risks coming out of the euro-zone, because just when you thought that they had succeeded at kicking the can a few months down the road, which was the conclusion of last weeks analysis that the risks of a collapse of the banking system had been delayed until at least Mid Jan 2012, instead this week has seen last weeks rescue plan already starting to disintegrate.

The discredited credit rating agencies have been busy issuing a string of warnings that they are ready to start downgrading virtually the whole euro-zone starting with the 5 PIIGS and then to target the euro-core with Fitch putting France on negative death watch as well as downgrading 7 of the worlds biggest banks. Even Belgium that had somehow been managing to fly under the radar despite its own bankrupt banks and debt burden was down graded by Moody's to Aa3.

The Bond Markets have had French 10 year bonds trading as high as 4% in recent weeks that's near double the interest rate charged to the UK to finance its debts, albeit more recent rates are 3.20% against 2.10% for the UK, which is still a sizeable disparity for countries that to academic economists appear very similar in many respects. Off course the markets do not follow academic models that because the markets discount the future, and don't care for what's visible in the rear view mirror.

How did French politician's react to the threats of debt downgrades ?

The French President Sarkozy eager to come across to the French electorate as the savior of the euro-zone and thereby get himself re-elected in April 2012 (behind in the polls) was still smarting from last weeks British rebuttal of the German / French Eurozone rescue attempt, let lose his attack dogs on Britain so as to both politically and economically diminish the growing status of Britain in Europe as it increasingly looks like that France itself made a huge mistake in joining the euro-zone as illustrated by comments form the head of the French central bank, Christian Noyer attacking the British economy.

Christian Noyer stated "A downgrade doesn't strike me as justified based on economic fundamentals. Or if it is they should start by downgrading the UK, which has a bigger deficit, as much debt, more inflation, weaker growth and where bank lending is collapsing."

The French Finance Minister, François Baroin, also jumped in with “Great Britain is in a very difficult economic situation, a deficit close to the level of Greece, debt equivalent to our own, much higher inflation prospects and growth forecasts well under the eurozone average. It’s an audacious choice the British government has made,” and referring to last weeks summit UK veto "with the singular, now solitary, exception of Great Britain, which history will remember as marginalised”.

And continuing his downgrade panic driven attack rhetoric further "It's true that the economic situation in Great Britain is very worrying and that we prefer being French rather than British on the economic front at the moment" and again speaking to a newspaper “the rating agencies should start by degrading the United Kingdom, which has greater deficits, as much debt, more inflation and less growth than us."

Whilst on face value Britain's economic and debt situation is worse than that of France which the recent article (28 Nov 2011 - Eurozone Being Swallowed by Expanding Debt Black Holes, Mega Bond Market Profits and Default Booms ) illustrated at length that UK total debt (public+private) approximates 500% of GDP against French total debt of 350%.

However, what the French central bankers fail to acknowledge is that there are two major reasons why France is being accurately perceived as a far higher credit risk by both the markets and the one year behind the curve credit ratings agencies.

1. The UK can print money which the French gave up the right to do in exchange for a stable currency. This is a major advantage for the UK which virtually ensures that the UK would be the last country standing in Europe to default on its debts, AFTER all of the others including France, and even mighty Germany have gone bust because Britain can easily with just a whisper from George Osbourne's lips into the ear of Mervyn King conjure as much money as is needed into existence to monetize UK government debt, and have done so to the tune of £275 billion to date, which has been funneled to the banks to buy government bonds to reduce UK interest bond market interest rates whilst at the same time resulting in higher UK inflation, which is the price for printing money.

2. That French debt is denominated in euros and their currency is the Euro that is primed to collapse as a consequence of fellow bankrupting euro-zone members who's deficits are unsustainable and in fact have already triggered a default in all but name, i.e. Greece HAS defaulted on its debts, with Greek bond holders sitting on losses of upwards of 50%. Therefore France being in the Euro-zone shares the risks of default for many of the reasons why Greece defaulted also equally applies to France in that France is finding itself unable to grow or inflate its way out of the debt burden, which ensures that ultimately France is just a big version of Greece and as we have seen during the year with the PIIGS, the markets do not calmly wait for debt to GDP to reach 100%+, instead the markets usually panic when it becomes crystal clear that the debt trajectory is definitely unsustainable as a consequence of the fundamentals therefore France can scream and shout for as long as it wants to that the UK has a worse debt position when the market reaction makes French official debt to GDP of 85% (real total 350%) as just as bad as if they had 120% of debt to GDP, for the markets already know that ALL of the governments are lying with France at least 350% of GDP in terms of total debt (UK 500%).

Whereas the UK has its own currency that it can print (debase) at will and therefore whilst volatility may be high there is no imminent risk of collapse of sterling on anywhere near the risk posed by euro-zone countries. The market knows that the Bank of England is always ready to monetize UK debt to alleviate short-term pressures that would result in collapse of the banking system.

In fact the primary risks to the UK banking system at this point in time are contagion risks out of the Eurozone that's PIIGS, French and German banks triggering a chain reaction collapse of the global banking system a taste of which we recently witnessed with the collapse of the MF Global as a consequence of over leveraged exposure to Italian government bonds which resulted in the loss of actual deposits of customers who had little understanding that their funds / were being used as collateral to gamble on Italian government debt.

You think you money is not at risk in the banks ? Think again, learn the lesson from MF Global where 400,000 people with accounts with have seen their monies vanish into thin air because the small print allowed MF Global to gamble with their client monies despite being in segregated accounts..

So the head of the French Central bank is deliberately trying to push markets attention away from the fact that the crisis has reached a critical point and trying to ignore that both France and Germany are directly responsible for the euro-zone debt crisis because BOTH countries themselves broke the fiscal rules as contained within the Maastrict Treaty right near the very start of the Euro currency and thus gave the green light for others to also go on a borrowing and spending binge on low interest rates.

The risks of a collapse of the banking system most definitely are with a trigger out of the Eurozone and particularly France than the UK, therefore the credit ratings agencies whilst being several years behind the curve are correct to see the credit risk of French debt as being far, far higher than that of the UK for it does pose a severe risk as evidenced by rising French government debt market interest rates.

But what the credit rating agencies appear blind to is the fact that no government would be able to escape the consequences of a collapse of the euro-zone or default of the debts of any major economy, even Greece leaving the euro-zone could be enough to trigger banking system collapse as they would all fall like dominoes one after the other eventually including even the worlds reserve currency holder, the United States, in which case maybe a downgrade of France could be the trigger that starts a cascading collapse of the eurozone which explains the panic in Paris. If France becomes Italy overnight then where does the money come for all these ever expanding bailout funds? Throw France also in the mix and the bailout pot required would extend to at least Euro 5 trillion which Germany as the last euro man standing is just not big enough to bailout everyone!

So France instead of putting several hundred billions of euros into the bailout pot, may find itself after a credit ratings downgrade seeking several hundred billions in bailout funds itself in a matter of months, especially as it has about as much debt requiring refinancing during 2012 as Italy (about Euro 400 billion).

Meanwhile the Eurozone rescue summit of barely a week ago looks as though it is already in serious trouble with many countries now having second thoughts such as Sweden, Czech Republic and Hungary as they realise that they don't want to be put under German Bundesbank control, so instead of Britain being against the 26, the reality is that it is more like currently 20 against 6 and by March 2012 at best 17 against 10, though more likely it will be less than 10 against the rest, with chances that ultimately even France itself will not be able to politically stomach being dictated to on its tax and spending from Berlin (especially in advance of an election) despite the consequences, all of which will become apparent in the debt and equity markets long before you see the news in the mainstream broadcast media, therefore europe looks set for a perfect storm of paralysis and a series of escalating panics during the first 6 months of 2012, which will act as a trigger to kick start money printing by the ECB on a huge scale i.e. at least Euro 1.5 trillion of QE, which I had expected would have started by now, though the longer the delay the more the pain and greater will be the ultimate cost.

So my last Friday's hopes that the muddle through summit would buy some time for the bankrupt eurozone banking system into mid January 2012 is now starting to look not so safe a bet, which means its back to building and maintaining those firewall's against the bankrupt banks that are literally teetering on the brink of collapse as evidenced by continue freezing of the interbank LIBOR market as investors dump euros for dollars, german bund's and even UK government debt leaving banks unable to borrow from one another instead being forced to borrow at far higher short-term rates form corporations, that's right! Euro-zone banks are borrowing at high short-term interest rates from cash rich corporate's which is surely unsustainable as bank after bank experiences being locked out of the money markets and forced to go cap in hand to the ECB with French banks topping the list to borrow and pay down their debt rather than the refinancing of maturing sovereign debt.

Euro Collapse, What Would happen?

Should the now not so unthinkable happen then none of the eurozone member countries would escape the impact of a collapse of the currency in the rush to reintroduce replacement currencies, all of which would lose value against the existing Euro which will probably continue to exist in some semi-frozen state, i.e. I doubt many more new notes would be printed in an attempt at preserving its value against which all other currencies would be converted, so Euro notes and coins would become the most valuable money as those with cash in Euro-zone banks would have their accounts frozen during the process of reintroduction of domestic currencies which means heavy loss of value, especially for the Greeks, any money in Greek banks will become pretty much worthless. Even the mighty German DMark would take a good 25% hit with the rest on a falling scale towards Greece's Drachma perhaps trading at a 90% discount to the euro.

So my best advice to my euro-zone readers, is to pull cash out of the banks and keep your money in cash, euro notes, or better still german euro notes, though given the limited number in circulation when compared against bank deposits and sovereign bonds, I am assuming that all euro bank notes across member states would be equally valued, anything less risks, well hyperinflation! i.e. as a consequence of loss of faith in currency. So no, I don't think the ECB would be so stupid as to not equally guarantee ALL euro notes and coins in circulation as having the SAME value regardless of local symbols printed on the notes.

Still when people panic things can become pretty irrational, in which case if you see someone pushing a wheel barrow full of Greek Euro notes then that might prove to be a bargain buy, though check to make sure they have not been stamped as effectively having become temporary Drachma's!

Italians Hoarding Euro Notes Will Feed Inflation During 2012

Whilst most are focused on the announcements out of France and Germany, what many may not be aware of is the ongoing run on PIIGS banks as depositors withdraw cash (Euro's) with governments and banks scrambling to reduce the flight of capital from the banking systems such as Italy announcing plans to limit cash transactions of over Euro 1000, and if you have been reading my past commentaries you will know one of the prerequisites for hyperinflation is a sharp increase in the amount of notes in circulation because it increases the velocity of money as cash cannot be destroyed through default instead is continuously and increasingly exchanged for goods and services resulting in rising inflation, and the higher inflation goes the less likely people are to hold onto cash for any length of time and the higher inflation goes in an upward spiral, so depositors pulling funds out of banks into cash is very bad news for the inflation expectations for these countries, especially as academic economists in the mainstream press have been banging the deflation drum quite loudly for the past 6months so the shock of rising inflation instead of deflation will act as a further impetus towards increasing the velocity of money.

What is Most Probable

The eurozone situation has continued to deteriorate since I last wrote, but I still rate an actual collapse of the Euro-zone as a low probability, up from about 5% to about 10%, which when you think about it is extremely high given the consequences for everyone such as a recession that would be about three times as worse as that of 2008-2009. So on the balance of probabilities I still think that at the end of the day, well for 2012 at best that the Euro will be saved by the ECB in conjunction with the US Fed in a repeat of what they did during early December as I wrote at the time - 01 Dec 2011 - Stock Market Panic Buying As Bear Market Goes Up in Smoke on Dollar Printing for Euros

All that matters is this - No matter what happens to the Euro, its collapse threatens a collapse of the worlds banking system therefore it will not be allowed to collapse, which means the worlds reserve currency will be printed in the trillions to mop up the flood of euro's in exchange for dollars thus ensuring there is no collapse in the euro for which we have just had a small taste of what would come to pass, its simple - print dollars and all other currencies for euros which means all currencies collapse together but at a shallower pace with the mainstream press pumping out propaganda that the Euro has actually risen when in fact they have all fallen sharply together, now you tell me if all this will not be highly inflationary?

The worlds central banks can and do print trillions as and when they chose to. There is no limit. This is the only real lesson they learned from the Great Depression, so instead of having a Deflationary Depression, we are having an Inflationary Depression.

The ECB WILL start to MONETIZE PIIGS DEBT, the ECB WILL BAILOUT the European banks, probably this month. Though what the ECB does not know is how bankrupt the European banks really are, because neither do they! The derivatives market is estimated at $1 Quadrillion, nowhere have I read in any official statistics anything that comes close to addressing this. What happens to the value of currencies if this needs to be monetized ? I know Zimbabwe was printing 100 trillion dollar notes at its money printing peak, this is what lies in store because ALL fiat currencies are trending towards HYPERINFLATION (don't worry I'll let you know when).

Remember countries can only go bankrupt if they cannot print money, if they can print then you cannot go bankrupt because they stealth default on their debts by means of high inflation, I will cover this in my next article in-depth.

At the end of the day money printing is highly inflationary, if you are still skeptical of the unfolding inflation mega-trend, well then prepare to lose at least 80% of the real value of your money deposited in the banks over the next 10 years, and much sooner if the euro-zone actually does explode, either way you lose!

Protect Your Bank Deposits from the Bankrupt Banks and Inflation NOW!

Yes, if you have not already done so then you really do need to protect your deposits against the bankrupt banks, because as I warned of right BEFORE Lehman's went bust in 2008 and continuing into 2011, the bankrupt banks are sitting on monumental contagion risks courtesy of their off balance sheet derivatives positions that have grown from $500 trillion in 2008 to over $1.5 quadrillion today! These bankrupt banks have tripled the risk over the past 3 years! This is clear evidence of a ponzi scheme that continuously requires expansion to prevent implosion that is becoming inherently more unstable over the passage of time.

Which is why I am going to repeat for the tenth time, take a serious hard look at where your cash is deposited because if you do not then it could disappear in a puff of smoke MF Global style. You need to protect your deposits now by moving them out of the Eurozone and into too big to fail UK banks and then stick to the FSCS compensation limits, at least in the case of financial catastrophe this will buy you some time, maybe not much because Britain is at the heart of the global derivatives off balance sheet ponzi scheme. More here - 03 Dec 2011 - How to Protect Your Bank Deposits, Savings From Euro-zone Collapse Financial Armageddon

Off course you should be eyeing moving your funds out of all banks because after tax your destined to lose a good 3% per year of your deposited funds value anyway. In this respect you do have to take on a little risk, but given that the funds on deposit at the banks are at risk anyway you can protect against the inflation mega-trend for instance by buying corporate bonds, for example Tesco's very recent offering of 2019 RPI Index linked Corporate Bonds that Pays RPI +1% (also indexed), which if held to maturity protects you against inflation with very little risk, also if purchased in an ISA the interest is tax free, and being a corporate bond is traded on the secondary market (can be bought and sold at any time via your stock broker).

Those that say hyperinflation cannot happen do not understand the consequences of the ticking derivatives ponzi time bomb, if it were to explode and it could as consequence of bank contagion risk from something such as one of the PIIGS defaulting, the resulting panic would ignite Central Bank QE on an epic inflationary scale as that is the only answer they would have to settle the derivatives contracts to prevent total financial and economic collapse.

The bottom line is this you need to first create a firewall between yourselves and all aspects of the bankrupt banking system, and then against fiat currency because no matter what the official inflation statistics state, you already KNOW that the money in your pocket is losing value fast, at perhaps as much as 15% per annum in terms of what you actually need to buy to feed, clothe and warm yourselves.

War in the Middle East ?

When politicians are under intense pressure from revolting populations as a consequence of economic depression then they always look to switch the blame onto someone else, preferably foreigners to unite against, the French have spent the week blaming their traditional best enemy Britain with a war of words, however, there is a risk of a real war coming out of this crisis if the global financial system continues the trend towards collapse and the prime candidates for war are Syria and Iran.

After 10 years of bloodletting, the last American troops have now left Iraq for their military bases in Kuwait, will 2012 see the first American troops invade Iran?

As ever America's poodle, Britain will be there as well as the French and many more bankrupting european states all lining up one after another eager to distract their suffering populations and allow them to enact their own Patriot and Traitor Acts to silence dissent.

Stock Market Santa Rally Technical State

My last quick look at the stock market concluded in the following trend expectation that targeted a new bull market high just prior to year end (01 Dec 2011 - Stock Market Panic Buying).

According to the script the Dow should be at around 12,300 by now, instead it last traded at 11,866, which therefore implies a 1000 point rally is necessary for the market to achieve its santa rally target, whilst not impossible, but given continuing immediate trend weakness is a tough ask for less than 2 weeks.

Trend Analysis - The Dow reacted from resistance at 12,290 by retreating to 11,800, a trend which so far is corrective in nature. However as of writing there is no sign that the correction being over, but as things stand the corrective pattern is resembling a falling wedge as bullish for the stock market, that looks set to resolve to the upside with at least a similar trend trajectory to the decline which implies a 500 point advance by year end.

Support and Resistance - Resistance is as 12260-12290 and support very nearby at just below 11,800, further support is at 11,620 should the correction continue. A breakout of 12290 would target a swing to between 12750 and 12876 which implies it could take another correction before the Dow can break the bull market high.

Elliott Wave Theory - Taking the early October low as the end for the correction therefore a Wave C of an ABC, then this implies 5 waves higher of which we have completed Impulse eave 1 and corrective wave 2 and thus are now in Wave 3 of which we appear to have completed minor impulse wave 1 and are in corrective wave 2 about to start minor impulse wave 3. This count is very bullish for stocks, too bullish, for now I will go with this being a Wave 3 which suggests we are 40% way through the move so extends into Mid January 2012. Which also allows the pattern to morph into something more complex i.e. a triple ABC which as of writing appears more probable.

MACD - Is primed to turn bullish early next week which implies an uptrend should be imminent

Stock Market Trend Forecast Conclusion

The primary assumption I am making here is that the euro-zone does not start to completely collapse (10% chance) i.e. an event such as France turning into an Italy with 10 year bond interest rates soaring to over 6% (current 3%) during the next few weeks. If it does happen then all bets are off! We are flying over the edge of the eurozone black hole event horizon that would near instantly destroy more global economic activity than that which took place during the great recession of 2008-2009 and hit asset markets hard.

Therefore my quick take is for immediate price action to continue last weeks weakness into the start of the week that risks an intra-day break of 11,800 support. Early week weakness will not leave many trading days remaining before year end, which thus implies a lower forecast range that targets a Dow year end close of between 12,400 and 12,600 or about 600 points from where ever the Dow will make a low early next week, and implies a continuing rally during the new year towards a new bull market high as still being possible during mid January 2012 as illustrated by the below graph.

Peering into the Fog of 2012

I have a load of analysis to complete on the economy, inflation mega-trend, and UK housing market before I will be able to move towards a detailed technical picture for stocks for 2012. However, taking the ongoing euro-zone debt crisis into account, the implications are strongly negative for the stock market trend for 2012, which at this point suggests a great deal of volatility during the first half of 2012 i.e. large risks to the downside in response to the worsening state of the euro-zone that looks set to emit waves of panic during the first half of the year as the euro-zone politicians will only finally act under intense market pressure (higher bond market interest rates).

So far my strategy for the duration of the bull market has been pretty simple (as illustrated by my archive and newsletters) which has been to buy corrections, namely the greater the correction the greater the buying opportunity, which is why the deep discounts during the Summer / Autumn 2011 correction has seen my stocks portfolio mushroom to its largest size in nominal terms of my 25 year trading history amounting to a net long position at 30% of total assets. However, the events of the past couple of weeks has put me on the defensive going into the end of the year, and has me viewing the anticipated santa rally as an opportunity to reduce my net long position down to a more comfortable 20% risk over the next few weeks through sales and hedges.

As things stand today, the first half of 2012 is not looking good for stocks and other asset markets, we will probably see several market panics in response to the ongoing euro-zone debt and economic crisis, and the second half needs work to determine to any reliable extent, but I am assuming that we will see the euro emerge intact from this crisis as a consequence of global coordinated central bank QE's and other special measures that will succeed in igniting asset price recoveries during the second half of 2012, hopefully this foggy picture will become much clearer over the next few weeks as each piece of analysis is completed.

Your analyst, waiting for central bankers to do their job.

Source and Comments: http://www.marketoracle.co.uk/Article32210.html

By Nadeem Walayat

http://www.marketoracle.co.uk

Copyright © 2005-2011 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 25 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of three ebook's - The Inflation Mega-Trend; The Interest Rate Mega-Trend and The Stocks Stealth Bull Market Update 2011 that can be downloaded for Free.

Stocks Stealth Bull Market Ebook DownloadThe Interest Rate Mega-Trend Ebook DownloadThe Inflation Mega-Trend Ebook Download

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 600 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

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Saturday 10 December 2011

Germany Wins Eurozone War, UK Veto Puts Britain on the Fast Track to EU Exit

The Market Oracle Newsletter
December 10th, 2011            Issue #24 Vol. 5

Commodities Currencies Economics Housing Market Interest Rates Education Personal Finance Stocks / Financials Real Gems

Germany Wins Eurozone War, UK Veto Puts Britain on the Fast Track to EU Exit

Stocks Stealth Bull Market 2011 Ebook Direct Download Link (PDF 2.8m/b)

Interest Rate Mega-Trend Ebook Direct Download Link (PDF 2.3m/b)

Inflation Mega-Trend Ebook Direct Download Link (PDF 3.2m/b)

Dear Reader

"Britain will never join the Euro".... Germany has effectively won the Eurozone war as one after another EU states bowed to German pressure to toe the ECB / Bundesbank line for greater monetary union and centralised fiscal management under the guise of saving the euro or effectively face monetary death through either ever higher market interest rates such as that suffered by bankrupt Greece's 2 year bonds trading at a yield of 33%, or ejection from the Euro-zone and resulting economic collapse and an hyperinflationary wipeout of all savings.

This left Britain to Veto the treaty changes that 26 out of 27 agreed to and thus performing a tactical retreat Dunkirk style as David Cameron failed in his attempts to protect the city of London against primarily from French and German onslaught that has long enviously sought to steal a greater share of London's prominence as the defacto centre of the European financial system through which approx 50% of all financial business is conducted.

Unable to compete in the market place the French and Germans have long sought to cripple Britains' ability to compete against the Euro-zone currency block by means of destroying the UK financial sector through a series policies including a transaction taxes that would overtime diminish the advantages of doing business in London that is outside of the euro-zone and this transfer business towards the economic centre of Germany and to a lesser degree France, which the twin headed hydra of Merkozy knew would eventually force Britain to join the Eurozone in response to the increasing leakage of financial business to the euro-zone.

David Cameron unfortunately miscalculated the degree to which Merkozy had deployed arm twisting tactics not only on on the hook euro-zone members but also the other 9 EU countries outside the Eurozone such as Poland that David Cameron had hoped would add to the UK's weight in negotiating opt outs for the UK's financial sector. Unfortunately none of these countries could recall when Britain had come to their aid in their hour of need and instead fell under the financial spell of the Merkozy under the promise of eventual ECB funding of their budget deficits, which left Britain and David Cameron totally isolated as the only country to vote against the proposed EU treaty changes, instead now the Euro-zone will go it alone with the effective Germanification of the Euro-zone.

What's Planned for the EU 26?

  • Give up control of national budgets
  • Sanctions for Budget Deficits Greater than 3% of GDP
  • Provide Euro 200 Billion for IMF to Loan to Euro-zone members to re-finance debt during Q1 2012.

Britain's veto has effectively delayed implementation of the amended Treaty for several months as lawyers try to construct a legal framework for the treaty that excludes Britain, however it effectively means that Germany by probably March 2012 will take economic control of all euro-zone members, with the possibility that the other 9 none eurozone countries will also join and thus totally excluding Britain from all decision making meetings.

Has the Debt Crisis Been Solved?

In terms of the euro-zone sovereign debt crisis, no solution has been agreed to or even indicated that addresses the key problems of economic stagnation and growing unserviceable debt mountains, all that has happened is that the can has been kicked at most a couple of months forward into early 2012 when countries such as Italy, Spain and France will have to collectively re-finance over a Euro 100 billion of maturing debt that WILL to some extent have to be monetized by the ECB because the market won't buy it at anywhere near sustainable interest rates. In this respect we have already seen the ECB (Thursday) start the ball rolling by offering unlimited amounts of cheap money to Euro-zone banks for upto 3 years in an attempt at alleviating the credit crunch that risks a collapse of the euro-zone banking system, which effectively amounts to monetization of euro-zone debt through the backdoor, i.e. swapping PIIGS debt ( as collateral) against funds borrowed from the ECB, so if the banks default then the ECB is stuck with PIIGS debt, so the ECB is effectively buying PIIGS debts in all but name.

What does this all mean ?

When the deal is finally done (it could still unravel), it will mean that Germany will boom (France hopes to somehow also benefit ) as they prosper from a captured export market, where Germany finances and massages the spending of other european states for their goods and services to a far greater extent to which we have witnessed the likes of China lending money to the United States to buy Chinese junk in exchange for greater Chinese economic power and diminishing US economic power. The euro-zone members under debt crisis pressures are signing themselves up to becoming economic slave states of a Greater Germany.

On the way out of the Summit, the Irish Prime Minister consoled a latently depressed and isolated Cameron that "you are still a member of the single market".

Unfortunately Britain is the clear loser here because there is no way that Britain can go against the whole E.U., which appears united against Britain therefore expect the E.U. member states to vote for a string of laws that will hurt Britain's biggest industry the financial sector, such as preventing euro-zone banks from doing business in London, which means Britain could now be on the fast track towards an exit from the European Union.

If Britain is on the way out then it needs to act fast to get the upper hand against a weak euro-zone, because at this point in time Britain has the advantage in that it can ACT quickly without having to have summits with 17 other member countries, especially as all the summit has done is to press the pause button on the crisis for perhaps no more than 2 months during which time the debt crisis continues to get BIGGER!

Britain needs to put itself ahead of the curve by sparking a domestic boom, even if it means devaluing the currency by as much as 20%, because as we have seen this week, Europe will NOT be there for Britain, the time to act is now! If Britain waits then it will be too late because as my earlier analysis illustrated (28 Nov 2011 - Eurozone Being Swallowed by Expanding Debt Black Holes, Mega Bond Market Profits and Default Booms ) that Britain has its own ticking debt time bomb that could send interest rates soaring to double or even triple current yields on 10 year bonds, by which time it will be too late and Britain will be forced by the IMF to swallow austerity on the scale being shoveled down PIIGS citizen throats.

My Reaction and Strategy

The euro summit gives me more time to get rid of cash for hard assets such as properties or low risk paper assets such as corporate bonds (as I am fully stocked up with likes of dividend stocks courtesy of the summer-autumn correction), as the outcome remains in that fiat currency is going lose value because the politicians only have one solution in mind which is to print money to buy votes, and therefore feed the inflation mega-trend (euro likely to fall at a faster pace than sterling because the markets aren't stupid), though now the risk of loss of nominal funds on deposit in the banks has been reduced to at least Mid January 2012 (hopefully), when we will again start to see building market pressure towards the flood of sovereign debt refinancing which is likely to result in higher sovereign debt yields and therefore the banking system again starting to freeze towards credit crisis extremes.

So if you have not already done so, you still need to protect your cash against the worst case scenario (step by step guide here How to Protect Your Bank Deposits, Savings From Euro-zone Collapse Financial Armageddon).

Off course you should be eyeing moving your funds out of the banks because after tax your destined to lose a good 3% per year of your deposited funds value anyway. In this respect you do have to take on a little risk, but given that the funds on deposit at the banks are at risk anyway you can protect against the inflation mega-trend for instance by buying corporate bonds, for example Tesco's very recent offering of 2019 RPI Index linked Corporate Bonds that Pays RPI +1% (also indexed), which if held to maturity protects you against inflation with very little risk, also if purchased in an ISA the interest is tax free, and being a corporate bond is traded on the secondary market (can be bought and sold at any time via your stock broker).

Really, sincerely, the banks are treating us all like suckers if we keep ones money on deposit in any UK bank that pays less than inflation (even before tax), that means 99% of all currently available UK deposit accounts, so do your research and up your tax free returns to between 5%-7% by taking a look at corporate bonds, especially as these days many corporations have better credit ratings than many sovereigns. Though as with dividend stocks, don't put all of your eggs into one basket, spread your exposure amongst a number of issues and maturities and take the corporations credit ratings into account.

Bull Markets Do What Bull Markets Do

To end on a bright note, a collapse of the euro-zone would have wiped out approx 15% of UK GDP, which is near triple that of the Great Recession of 2008-2009. So it is in the UK's interests for the euro-zone to survive and not collapse, in which respect the Euro-zone Summit has done what I expected it to do which is to buy time as I wrote just over a week ago - 01 Dec 2011 - Stock Market Panic Buying As Bear Market Goes Up in Smoke on Dollar Printing for Euros concluding in the following trend graph:

Despite the crisis news and widespread calls for an always imminent bear market to start, the stock market continues to trend towards a new bull market high by year end (DJIA). The bottom line remains that whilst the debt crisis can's continue to be kicked down the road then the bull market will do what bull markets do which is RISE!

So continue to enjoy the santa rally, I will endeavour to complete an in depth analysis by year end or early January 2012, which is pending analysis of the Inflation Mega-trend, UK economy, and the UK housing market, ensure you are subscribed to my always free newsletter to get this analysis in your email in box.

Your wealth protecting against bankrupting money printing sovereigns analyst.

Source and Comments: http://www.marketoracle.co.uk/Article32026.html

By Nadeem Walayat

http://www.marketoracle.co.uk

Copyright © 2005-2011 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 25 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of three ebook's - The Inflation Mega-Trend; The Interest Rate Mega-Trend and The Stocks Stealth Bull Market Update 2011 that can be downloaded for Free.

Stocks Stealth Bull Market Ebook DownloadThe Interest Rate Mega-Trend Ebook DownloadThe Inflation Mega-Trend Ebook Download

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 600 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Nadeem Walayat Archive
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The Market Oracle is a FREE Financial Markets Forecasting & Analysis Newsletter and online publication.
(c) 2005-2011 MarketOracle.co.uk (Market Oracle Ltd) - The Market Oracle asserts copyright on all articles authored by our editorial team. Any and all information provided within this newsletter is for general information purposes only and Market Oracle do not warrant the accuracy, timeliness or suitability of any information provided in this newsletter. nor is or shall be deemed to constitute, financial or any other advice or recommendation by us. and are also not meant to be investment advice or solicitation or recommendation to establish market positions. We recommend that independent professional advice is obtained before you make any investment or trading decisions. ( Market Oracle Ltd , Registered in England and Wales, Company no 6387055. Registered office: 226 Darnall Road, Sheffield S9 5AN , UK )

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Friday 2 December 2011

Stock Market Panic Buying As Bear Market Goes Up in Smoke on Dollar Printing for Euros

The Market Oracle Newsletter
December 1st, 2011            Issue #23 Vol. 5

Commodities Currencies Economics Housing Market Interest Rates Education Personal Finance Stocks / Financials Real Gems

Stock Market Panic Buying As Bear Market Goes Up in Smoke on Dollar Printing for Euros

Stocks Stealth Bull Market 2011 Ebook Direct Download Link (PDF 2.8m/b)

Interest Rate Mega-Trend Ebook Direct Download Link (PDF 2.3m/b)

Inflation Mega-Trend Ebook Direct Download Link (PDF 3.2m/b)

Dear Reader

The past 6 months has seen a very volatile trading range as the stocks bull market has attempted to end its correction and resume its trend to new bull market highs, which has been held back by increasingly worsening debt crisis news out of the Eurozone as the Euro currency block continues to fight to hold itself together whilst it's fragmented political structure ensures that there is always a long delay in policy reaction to bond market crisis events that has had a negative fallout across the worlds banking system and financial markets.

One of the most dangerous manifestations of the euro-zone debt crisis is in the freezing up of the inter bank market, with banks reluctant to lend to one another given the rising risks of default as illustrated by the LIBOR rates rising across the world as investors / lenders sought to pull deposits and loans from first euro-zone banks and then from any other bank due to contagion risks in advance of the increasing risks of sovereign default that would not only bankrupt many banks but threaten a collapse of the Euro.

The credit crisis is manifesting itself in the LIBOR markets as the dollar and other currencies such as sterling rates rise as investors dump euro deposits in exchange as illustrated by the LIBOR graphs below.

The worlds major central banks led by the U.S. Fed re-acted to the credit crisis yesterday by flooding the banking system with dollars to satisfy demand from euro-dumpers, swapping their toxic Euro's for new crisp liquid Dollars (printing dollars for euros) which has had the effect of relieving building pressure that was fast accelerating towards a potential Euro-zone Lehman's event (which was probably no more than 10 days away), at best this can be seen as just buying time, a few weeks at most, as it does not change the fundamentals of the inherent flaws in the Euro-zone which i recently covered at length in (Eurozone Being Swallowed by Expanding Debt Black Holes, Mega Bond Market Profits and Default Booms ). In this respect there is Euro-heads meeting in about 10 days time, which will probably do what needs to be done to kick the can well into 2012, which will give the BULL MARKET time to do what bull markets do. I would not be surprised if the oft speculated on Euro-bond actually materialises over the coming weeks, though I don't keep a too close a eye on developments out of the Europe as each country has its own long list of talking heads thus making 90% of what comes out just confusing noise.

All that matters is this - No matter what happens to the Euro, its collapse threatens a collapse of the worlds banking system therefore it will not be allowed to collapse, which means the worlds reserve currency will be printed in the trillions to mop up the flood of euro's in exchange for dollars thus ensuring there is no collapse in the euro for which we have just had a small taste of what would come to pass, its simple - print dollars and all other currencies for euros which means all currencies collapse together but at a shallower pace with the mainstream press pumping out propaganda that the Euro has actually risen when in fact they have all fallen sharply together, now you tell me if all this will not be highly inflationary?

The worlds central banks can and do print trillions as and when they chose to. There is no limit. This is the only real lesson they learned from the Great Depression, so instead of having a Deflationary Depression, we are having an Inflationary Depression.

The ECB WILL start to MONETIZE PIIGS DEBT, the ECB WILL BAILOUT the European banks, probably this month. Though what the ECB does not know is how bankrupt the European banks really are, because neither do they! The derivatives market is estimated at $1 Quadrillion, nowhere have I read in any official statistics anything that comes close to addressing this. What happens to the value of currencies if this needs to be monetized ? I know Zimbabwe was printing 100 trillion dollar notes at its money printing peak, this is what lies in store because ALL fiat currencies are trending towards HYPERINFLATION (don't worry I'll let you know when).

Remember countries can only go bankrupt if they cannot print money, if they can print then you cannot go bankrupt because they stealth default on their debts by means of high inflation, I will cover this in my next article in-depth.

The Stock Market Soars

So if all the news is bad why is the stock market rallying? The Dow closed up near 500 points at 12,045, barely 6% away from its bull market high.

The mainstream financial press, populated by journalists that constantly refers to academics will NEVER understand what drives the markets, which is why the likes of the BBC's Chief Crisis reporter, Robert Peston stated recently in response to stocks rallying in the face of relentless crisis news :

"The behaviour of the markets seems to be slightly odd, because markets have stabilised and share prices have risen a bit, and its quite difficult to see why that would be, plainly investors are taking comfort from the noises out of athens that this referendum may be off and may not happen. but lets be clear that the spectacle of these frantic negotiations is not exactly evident of a stable government, is altogether plausible that this government will fall, and in a general election where Greece will stick with the bailout plan is all up in the air".

"I find it slightly peculiar why investors are seeing this as good news"

And remember this guy from a couple of months ago ?

"know the stock market is finished.".... yeah, certainly looks finished, standing about 10% higher since he spoke in late September.

So what is it that approx 90% of the media and 99% of the academics are missing ?

If you have been reading any of my articles over the past few years then you should know the answer, which is that the primary driver for all economies and especially those that are the focus of my analysis, UK then US is the INFLATION MEGA-TREND that over the long-run inflates asset prices exponentially (as measured in free falling fiat currencies).

Stock Market Technical Picture

My last look at the stock market (27 Oct 2011 - Stocks Stealth Bull Market Pounds the Crash is Coming Bears with Euro-zone Hammer ) re-iterated why investors should be on guard against the perma-bears and the blogosfear who barely a few days ago were claiming that the a new bear market in stocks (at least for the 10th time in 2.5years) was now definitely in play and that investors should position themselves accordingly. Instead my view has remained constant that investors should view the ongoing corrective trading range as opportunities to accumulate for the long-run at deeply discounted prices on each reaction towards the bottom of the range in anticipation of the resumption of the bull market as part of the Inflation Mega-trend where the objective is to hedge against inflation by means of investing in consistently dividend increasing stocks.

The technical picture remains in that the stock market is now trading towards the upper end of its range pending a breakout higher. In terms of probabilities for breakouts, November is a good month for breakouts higher, which the market failed to follow through on this year, however December is an even stronger seasonal month (santa rally), so the probability is even stronger for the Dow to break to new bull market highs during the next few weeks.

There is little point in doing an in depth analysis at this point in time as the conclusion would probably be little different given the seasonal factors and existing trading range. However, I will leave you with my more precise thoughts in that my longstanding expectations remain for new bull market highs before the end of this year, which remains possible as illustrated by the trajectory of the trendline which extends to a new high just prior to year end.

So whilst the perma-bears, blogosfear and mainstream financial press all are continuously regurgitating noise on imminent financial armageddon in an endless feedback loop, the actual facts are that all investors / traders have had ample opportunities to accumulate at deep discounts in advance of the eventual breakout to new bull market highs by virtue of the fact that dividend increasing, and many other stocks are leveraged to the inflation mega-trend, i.e. they have first call on inflation before consumers.

Ensure you are subscribed to my always free newsletter to get my next analysis in your email in box.

Source and Comments: http://www.marketoracle.co.uk/Article31855.html

By Nadeem Walayat

http://www.marketoracle.co.uk

Copyright © 2005-2011 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 25 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of three ebook's - The Inflation Mega-Trend; The Interest Rate Mega-Trend and The Stocks Stealth Bull Market Update 2011 that can be downloaded for Free.

Stocks Stealth Bull Market Ebook DownloadThe Interest Rate Mega-Trend Ebook DownloadThe Inflation Mega-Trend Ebook Download

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 600 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Nadeem Walayat Archive
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How to Subscribe

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About: The Market Oracle Newsletter

The Market Oracle is a FREE Financial Markets Forecasting & Analysis Newsletter and online publication.
(c) 2005-2011 MarketOracle.co.uk (Market Oracle Ltd) - The Market Oracle asserts copyright on all articles authored by our editorial team. Any and all information provided within this newsletter is for general information purposes only and Market Oracle do not warrant the accuracy, timeliness or suitability of any information provided in this newsletter. nor is or shall be deemed to constitute, financial or any other advice or recommendation by us. and are also not meant to be investment advice or solicitation or recommendation to establish market positions. We recommend that independent professional advice is obtained before you make any investment or trading decisions. ( Market Oracle Ltd , Registered in England and Wales, Company no 6387055. Registered office: 226 Darnall Road, Sheffield S9 5AN , UK )

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Copyright 2011 MarketOracle.co.uk


--

Thursday 1 December 2011

December Home Buyer's Newsletter

To unsubscribe, do not hit reply. See instructions
at the end of the newsletter.

+++++++++++ December 1, 2011 +++++++++++++++++++

CONTENTS:

Introduction: Both Existing and New Home Sales Rise
Mortgage Rate Update: 30-year Rates Sub 4%
This Month's Tip: Compare First, Then Commit

++++++++++++++++++++++++++++++++++++++++++++

Introduction: Both Existing and New Home Sales Rise

Welcome to the December edition of the Home Buyer's Newsletter. Let's
start off with wishes for a Happy Holiday Season to all of our readers.

Existing-home sales improved in October while the number of homes on the market
continued to decline, according to the National Association of Realtors®.

Total existing-home sales, which are completed transactions that include
single-family, townhomes, condominiums and co-ops, rose 1.4 percent to a
seasonally adjusted annual rate of 4.97 million in October from a downwardly
revised 4.90 million in September, and are 13.5 percent above the 4.38 million
unit level in October 2010.

Lawrence Yun, NAR chief economist, said the market has been fairly steady
but at a lower than desired level. "Home sales have been stuck in a narrow
range despite several improving factors that generally lead to higher home
sales such as job creation, rising rents and high affordability conditions.
Many people who are attempting to buy homes are thwarted in the process,"
he said.

On the new home side, sales of new single-family houses in October 2011
were at a seasonally adjusted annual rate of 307,000, according to estimates
released jointly on November 28th by the U.S. Census Bureau and the Department
of Housing and Urban Development. This is 1.3 percent (±19.7%) above the revised
September rate of 303,000 and is 8.9 percent (±17.2%) above the October 2010
estimate of 282,000.
The median sales price of new houses sold in October 2011 was $212,300; the
average sales price was $242,300. The seasonally adjusted estimate of new
houses for sale at the end of October was 162,000. This represents a supply of
6.3 months at the current sales rate.

+++++++++++++++++++++++++++++++++++++++++++++

Mortgage Rate Update: 30-year Rates Sub 4%

Long-term mortgage rates continued to spend most of the month in historic
low ranges with 30-year fixed-rate mortgages averaging 3.98% in the period that
ended November 23rd, according to mortgage company Freddie Mac. This was a decline
from an average of 4.10% at the beginning of the month. Similarly, 15-year fixed-
rate mortgages declined from an average of 3.38% at the beginning of the month to
an average of 3.30% at the end.

Is a turn on the horizon? Price declines may be easing, inventory levels are getting
closer to normal, consumer confidence rose nicely in the last month. If you are in
the market, or thinking about entering it, now is the time to stay tuned!

For current average mortgage rates, see:
<A href="http://www.ourfamilyplace.com/homebuyer/rates.html">Mortgage Rates</A>
For an extensive discussion of all aspects of mortgages, see the section on the
site devoted to this subject. <A href="http://www.ourfamilyplace.com/homebuyer/mortgage.html">Mortgages</A>

++++++++++++++++++++++++++++++++++++++++++++++

Sponsor: Looking to Compare Agents? Try HomeGain.com

The most important part of your team for buying a home should be
your real estate Agent. Want to anonymously (and without obligation)
compare Agents? You can compare experience, background and
much more at HomeGain.com.

<A href="http://www.homegain.com/sp/ae_intro.html?entryid=2267&ht=houseclicksAE">Compare Agents</A>

++++++++++++++++++++++++++++++++++++++++++++++

This Month's Tip: Compare First, Then Commit

This month's tip is one we touched on not too long ago, but as we
look at the Real Estate market as it exists late in 2011, it is
one that is important to revisit. Looking at some of the sale
transfers locally and nationally, and some of the prices that are
being paid, we often ask ourselves "what were they thinking?"
Unfortunately, in a lot of cases, they simply weren't thinking.

As we approach 2012, it is crucially important to have a clear picture
of housing values as they exist now. The continuing upheaval in Real
Estate, with falling prices, massive numbers of foreclosures and short
sales makes it imperative that a buyer is at the top of their game plan
when it comes to pricing.

If you don't want to run the risk of paying too much for a home,
and be sure that you aren't paying more than market value for your
home purchase then a CMA is a critical part of the process.
A CMA--Comparative (or Comparable) Market Analysis--is the
strongest tool in your home buying arsenal to give assurance
that you are not overpaying.

A CMA is a recap of housing activity in the area in which you are
interested, focusing on 3-10 properties that are similar in size and
amenities located in the same neighborhood or nearby. The CMA
will list specific details (number of bedrooms, number of baths,
total room count, square footage, age, etc.) for similar properties
that are currently on the market (active listings), those that are under
contract but not yet closed (pending listings), have closed and transferred
ownership (sold listings) as well as those listings that have either
expired without selling or have been withdrawn by the seller (taken off
the market). Because a CMA compares similar properties it can
give a buyer a pretty clear snapshot of current housing values in a
specific housing market. Although the CMA is very important, it
cannot be used as an absolute determination of value, since it generally
does not put a lot of weight on condition, an obviously important
factor.

While the CMA will list homes that are currently on the market as well
as those that are pending or have expired, it is those properties that
have sold and closed that give the most information. Sold and closed
information is important, since these detail specifically what buyers
are willing to pay (and lenders are willing to lend) for specific properties.
Don't make the mistake of putting too much weight on the prices
of properties currently on the market. These homes could be wildly
overpriced compared to the price for which they eventually sell for.
Likewise, one of the biggest reasons that a property listing will
expire without selling is because it is overpriced, so the prices of these
expired listings should be taken with a grain of salt.

What does a CMA include? You will find at least the following information
on the "subject property" (the one you want to buy) and anywhere from
3 to 10 additional properties:

+ Street address
+ Square footage
+ Number of bedrooms, number of baths, number of total rooms
+ Age
+ Listing price and sold price if closed

To see an example of a CMA, visit that page on the Home Buyer's
Information Center site: CMA

Where can you get a CMA? If you are being represented by a Buyer's
Agent, they should be able to develop a CMA for you in a short amount of
time. Since virtually all Multiple Listing organizations are computerized,
the Buyer's Agent can pull a CMA up on their home or office computer
and have it available to you. If you are dealing with an Agent who is
representing the seller (the home in which you are interested is their
listing) it may be that the Agent cannot develop a CMA for you, since
their representation of (and loyalty to) the seller may preclude releasing
any information that could compromise the seller's position. For example,
if a CMA showed that the average property in the neighborhood was
selling for $147,000 and the home was listed for $165,000, it is highly
unlikely that the seller's Agent would give that information to a buyer.
This is one of the many reasons that a home buyer should always
strongly consider using a Buyer's Agent, if one is available. See a
discussion on the site:Buyer Agency
Summing Up

A CMA can be your most important tool in negotiation, since it will detail
exactly where, price-wise, the house in which you are interested is positioned.
Is it underpriced (a bargain), priced "on the money" (a fair price for both buyer
and seller) or overpriced (time to either negotiate hard or walk away). As
we have mentioned many times in the past, if you overpay for a home in a strongly
appreciating market, the market will eventually cover your mistake. If, however,
you overpay in a flat or declining market, you will end up holding the financial
bag.


Next Month's Tip: Be Budget Wise

++++++++++++++++++++++++++++++++++++++++++++++

The Home Buying Checklist

Many of our visitors have said that one of the most valuable
aspects of the Home Buyer's Information Center is the
Buying Checklist, where they can make sure that all
the bases have been touched. You can find the checklist
here: <A href="http://www.ourfamilyplace.com/homebuyer/checklist.html">Home Buyer's Checklist</A>

A special thanks to all those who have written to let us know
that they have found the Home Buyer's Information Center a
helpful resource in their buying process.

Have a great month and good luck in all your endeavors!

The Team at the Home Buyer's Information Center

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