Interest Free Finance is it possible

[Sunfish]

This snippet is from a letter on the World Economic Forum.

Meanwhile, Fan Gang revealed that his government had lost
faith in the dollar. "The U.S. dollar is no longer (seen)
as a stable currency," he said. In the months ahead, China
would begin to separate itself from the dollar that 'will
not stop devaluating,' he told the world improvers. As to
why China hadn't done so already, he explained that it was
a bit like fixing a roof. When it rained heavily (such as
last fall when the dollar was falling sharply) you can't do
it... and when the sun is shining, you don't have much
interest in doing it: "High pressure... we don't do it.
When pressure's gone, we forgot."

This time, we won't forget, Fan vowed. The Chinese are said
to be buying euros.

 

[nat r]

Alan Greenspan > Fan Gang

Relevence = zero

 

[Free Loader]

Thommo, are you suggesting that IFHL is being funded by investors/institutions abandoning a weakening USD?

 

[Sunfish]

Thommo, are you suggesting that IFHL is being funded by investors/institutions abandoning a weakening USD?

Yes, I gave some explanations in post #39 of this thread.

T

 

[nat r]

Thommo...that is the worst explanation given to date...and lets face it the competition is pretty stiff

 

[Sunfish]

Thommo...that is the worst explanation given to date...and lets face it the competition is pretty stiff

Nat, I hope you are not saying US wealth isn't going overseas?

Some Yanks are buying gold and silver (which have a zero coupon rate ) as a defense against the falling dollar already.

 

[TJamesX]

Nat_R: If I used sophisticated hedge fund strategies around arb opportunities to achieve returns over a given time period, then how much money can I make? Let's say the target profit is $500,000 dollars per month for a given amount of capital. How much capital would I need to clear $500,000 a month using these strategies? How does that work?

I don't think the point of an IFHL is to create the perpetual motion machine. At best it only appears to be a perpetual motion machine to the home loan borrowers. But secretly inside, there's a little self-sustaining "hedge motor" that needs $500,000/mo to keep it going.

If you're interested in arbitrage and finance in the worlds financial markets I would recommend reading The Rise and Fall of Long Term Capital Management (R Lowenstein?). I read it a couple of months ago.

Summary - What do you get when you have a the best arbitrage traders on wall street, mixed in with the inventors of modern finance theory and nobel prize winners, all backed with $billions from the some of the biggest banks in the world?

They made big bets on what they thought were efficient and sane markets - they had the best computer models - they had the Phd's. but in the end it all came down to predicting the future and not even they could do that......

....I'm very confident Trevor will

 

[Aceyducey]

Ac-ey-dc: other than trolls do you have anything to talk about??

BTW I have many investments ...none of them are used to fund zero interest mortages. I acually have a whack of cash in local & offshore hedge funds, some in private equity in unlisted companies and a fair amount in normal equites (geared and ungeared).

Start off with an insult - hehehe - now you're amusing me

So no property then...so you don't really need zero interest loans anyway

I'm not sure what I have to talk about with you - you've said virtually nothing of value on the forum (fits into that 98% you mentioned earlier) & there's nothing I can grasp from your posts to actually talk about!

Though it appears we both have interests in the unlisted companies and shares areas.

Happy to talk with you if you can come up with something of value to discuss.

Otherwise I'll continue to be busy helping and supporting people in other threads in their property, business and shares investing and leave the trolling to you.

Cheers,

Aceyducey

 

[nat r]

Thommo: I'm sure money is moving out of USd into other currencies ....BUT flows like this can come and go and one thing that anybody who has thought hard enough about this to posistion themselves short in USD would want is a very high level of liquidity with regard to whatever they park their money in.

A 20 year zero coupon mortgage facility does not have any liquidity and wouldn't these offshore investors just buy A$ Govt bonds (AAA rated) at 5.50% ???? They can buy or sell $200 mill of them in one 30sec phone call to any one of the investment banks and only cross a 2bp bid/offer spread ie the buy sell price would be 5.51%/5.49%.

BTW gold & silver does actully pay a coupon ...when you are long you can put it out on repo (repurchase) and typically earn anywhere between 2 and 4 % on the value.

Re large cross currency moves:
I have seen these deals go thru on many occasions...I once saw a billion dollar currency trade go thru the FX desk in 3 mins. That was from a wealthy individual that was moving from A$ into USD and buying US govt bonds.

I once did a A$200 mill bond trade in my pyjamas at midnight on a mobile phone with by better half yelling out for me to keep the noise down in the background.

 

[nat r]

Aceducy: ....there are people on here are keen to discuss financial markets and international capital flows and all you can do is hang around like a bad smell making innane comments.

go away please



BTW: I do have property (both PPOR and IP) but I don't actually find it that exciting. I did have an offshore IP and that proved to be a pain in the backside.

 

[nat r]

Tjamesx: I'm not sure if they will write a follow up story on long term capital butthe guys behind it started another hedge fund about 2 yrs ago...they raised about $2billion dollars in the first 14 day and then closed the fund to new investors.

The view was that these guys ahd seen it unravel once before and that hands on experience was worth backing again.

 

[TJamesX]

Interesting....

I'm not sure that I'd be investing with them .

During my securities course I did come across some modern finance theory stuff - and it didn't sit all that well, it tends to assume a bit too much for me. Do you know if Merton, Scholes and Meriwether will be involved with the fund again???

Maybe the markets will get more efficient.... but i'm not sure if they will get more sane or logical

I'd tend to be more convinced by a Buffet type style to investing - and it was funny to see that the fund tried to get Buffet to bail them out the first time.... we'll see what happens the second time

 

[Aceyducey]

Aceducy: ....there are people on here are keen to discuss financial markets and international capital flows and all you can do is hang around like a bad smell making innane comments.

go away please

Nat, you lost the moral high ground awhile ago

BUT - you've started making some more useful comments & are not being insulting so that's an improvement.

What's your medium-term view on what China's likely to do with the yuan given the recent murmurs about an upwards reevaluation against the USD?

I'm seeing a lot of money flowing out of China into the European, US & Australian resource sectors atm, primarily buying up assets to offset their resource issues at home. If the yuan is revalued this would have some significant impacts on this sector.

I'm also interested in your views on the ongoing strength of the Euro vs the USD. There's another attempt underway to replace USD as the oil currency with the Euro, though the US has traditionally been prepared to go to war to prevent this.

Cheers,

Aceyducey

 

[nat r]

Acey: to be honest..I don't really watch or have a view on the yuan...so I won't make a comment on this.

 

[Bill.L]

Hi all,

Acey, nat "hasn't lost the high ground" at all.

If all of nat's posts help to stop just 1 person from applying(as in sending money to), then it will be worth the effort.

I have agreed to stop lambasting the IFHL's until early Feb as that is when the first are meant to be settled.

Are interest free loans possible?? I'll say a resounding NO!

BUT... I am prepared to say I'm wrong.
BUT... Only if someone is prepared to show how it is not only possible...but PROBABLE.

Thommo's idea of the getting out of the $US, is patently incorrect with what Nat has already described(as in why not $A bonds), however I did note a very early post by Trevor Cohen, claimed that Thommo was on the right path.

Let's just wait until early Feb.

bye

 

[asy]

OK Guys,

This was specifically supposed to be a thread on whether or not IFHL were possible.

IT was specifically requested that the Dx company not be mentioned.

But STILL you guys manage to turn it into a Sh.. fight.

Thread closed.

Take a breather before the next one.

asy
(wearing Sim's hat coz he's away)