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  • How to Profit From the Coming Collapse of China [View article]
    Most of the growth has been artificial. The initial phase outsourcing improved the living standard of regular Chinese but the government has focused on monumental infrastructure projects and real estate incentives that cause the biggest bubble in human history. What good is a train that drives 200 km per hour for a worker that make 400$ a month?
    We have a totalitarian regime running a planned economy and we have been bribed, via chap goods to look the other way. China is one big lie.
    Jun 21, 2010. 05:27 PM | 5 Likes Like |Link to Comment
  • How to Profit From the Coming Collapse of China [View article]
    I don't agree with that fallacy. You can't just decide one day to increase imports by 80%. That is not how sound economic growth works. They inflated their economy so much that now the Yuan doesn't need to rise. In fact, I think that after the initial appreciation it will after the foreign capital that was waiting for such a move will leave.
    Jun 21, 2010. 05:11 PM | 3 Likes Like |Link to Comment
  • How to Profit From the Coming Collapse of China [View article]
    I don't think so. China can't play their game anymore. Their exports are weak and the money printing is causing wage inflation. That is the end game of any inflationary policy. The Chinese investors seem to understand this and that is why their stock market is so weak. So only people who believe the China growth story are Western investors
    Jun 21, 2010. 04:46 PM | 5 Likes Like |Link to Comment
  • Israel's Imminent Housing Market Crash [View article]
    Let's say I make 10,000 NIS a month and my wife makes an extra 10,000, so make together 20,000 NIS. We have two children, so the maximum monthly payment we can afford is 2,400 NIS. Now, if we take a 30 year mortgage (360 monthly payments) at 1.5% we can take a loan of max 600,000:
    1,666= 600,000/360- This my monthly payment without interest
    my monthly interest payment is 600,000X1.5%/12=750
    So my monthly payment is 2416 NIS. Now, if I have 180,000 NIS in saving, and I use it as a downpayment then I can pay 800,000 NIS for a house. (30% downpayment)
    But, let say interest rates go up to 4.5%, then I pay 2,250 in interest plus 1,666 it amounts to almost 4,000 NIS. I can't pay that so I take a loan of only 400,000 NIS:
    1,111=400,000/360 - my monthly payment without interest.
    400,000X4.5%/12= 1,500. (monthly interest payment).
    So I pay 2,600 NIS which is a bit more, but I can only take a 400,000 NIS, so I can pay for the house only 600,000 NIS.
    Now, let's say instead of rates rising I need to pay 40% down payment. So, with 180,000 in saving I can only take a loan of 450,000 NIS so I can pay for the only 630,000 NIS.
    So you can see that both cases reduce the demand for housing at about the same amount.
    If you want more details you can read:
    The affect of rate hikes on Israel's mortgage market:
    israelfinancialexpert.....

    Now, most Israel property buyers take a loan(85%), so I think that a credit based housing (and corporate bond) collapse is a done deal.
    Jun 14, 2010. 05:47 PM | Likes Like |Link to Comment
  • Israel's Imminent Housing Market Crash [View article]
    Banks in Israel didn't act like those in the United States. But never in the United States where all the loans adjustable rates. Every bubble has it's own way of developing. But the big difference is that a small economy like will suffer a capital flight. The U.S housing market is very weak with 0% interest rates and 4% on the lone end. Think what would happen if they had them at 8% on the long end. People still don't get - it is not a matter if people want to buy house, they don't have the money. The only way they can buy a house is if they take crazy loans. Wages didn't go up much, the boom in housing came only form falling interest rates
    Jun 14, 2010. 09:00 AM | 1 Like Like |Link to Comment
  • Israel's Imminent Housing Market Crash [View article]
    The 8,000 NIS has nothing to do with the instructions, just a fact. An average mortgage is 600,000 NIS, with about 200,000 NIS down payment. So someone with 200,000 will be able to borrow only 500,000. So that will take the price down to 700,000. If rates would have risen by an extra 3% it would have increased the monthly payments and a person with 200,00 will be able to borrow only 500,000.
    Jun 14, 2010. 08:53 AM | Likes Like |Link to Comment
  • On China's Price / Wage Spiral [View article]
    I think that China is a bigger bubble than most people understand. They have already built enough houses to serve all of their population and they are still building even more. Beside that, a lot of the Chinesse are peseants that don't have the earing power fot housing in first place.
    In my opnion this is not a bubble in the context of a growing economy, like the bubbles the U.S had in 19th and early 20th century. The whole economy is one big lie and giant bubble.
    With have a totalitarian regime running a planned economy and people for some reason think they will make it where others have failed.
    Jun 14, 2010. 02:50 AM | 1 Like Like |Link to Comment
  • On China's Price / Wage Spiral [View article]
    Well, I guess we disagree, I think China is the biggest bubble in human history. No doubt that rising wage will contribute to global rebalancing but after such a long time that the world economy was not balanced it will cause a major crisis.
    There is a difference between rising wages due to productivity gains, which is good thing and rising wages due to inflation, I don't think wages are rising in real terms in China.
    But we will need to wait and see.
    Jun 11, 2010. 05:56 AM | Likes Like |Link to Comment
  • On China's Price / Wage Spiral [View article]
    If you wait for the data to be published than you miss all the price action. It is like shorting the U.S market after all banks went bust in late 2008. If things are so great in China why did the stock market top in August last year.
    But anyway, the trade surplus/deficit is not the main issue. China produces low cost goods that are made at a very low margin. They have wages out of control and their currency is up against their main trading partner which is the EU.
    If they realy will stop the money printing then all their economy will collapse. 60% of the economy is real estate and the rest is exports, that will fall due to the fall of the Euro and weakness in the U.S.
    Even if they remain with a surplus it will not change the fact that they have reached the limits of export driven low wage growth
    50 facts about China's Bubble Economy:
    israelfinancialexpert....
    Jun 11, 2010. 03:36 AM | Likes Like |Link to Comment
  • On China's Price / Wage Spiral [View article]
    You are right, this month figures where strong, but if china will go on with the money printing they will have a deficit in no time. If they stop they will have massive unemployment.
    See more details at:
    The Next Black Swan- A Yuan Devaluation
    israelfinancialexpert....
    Jun 10, 2010. 03:22 PM | Likes Like |Link to Comment
  • Future Looks Bright for Israel's ETF [View article]
    Israel's economy is one big bubble.
    israelfinancialexpert....
    Jan 18, 2010. 11:54 PM | Likes Like |Link to Comment
  • Banks: The Best Short for 2010 [View article]
    You could be right. However isn't it better to short banks in countries where the housing bubble hasen't topped yet? And as a result the banks are near their records highs?
    israelfinancialexpert....
    seekingalpha.com/insta...
    Jan 18, 2010. 11:09 PM | Likes Like |Link to Comment
COMMENTS STATS
27 Comments
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