QUESTION: Sir,
Listening to the WEC 2018 recording this weekend, Mike Campbell made an interesting sideline comment. He stated that pension funds were heavily invested in real estate. Is this just Canada or the US as well? If taxes go up will this further push the pension funds over as well as the emerging markets? If pension funds go under what happens to these investments?
Wasting time by checking my Facebook page I saw 2 advertisements that struck me. One was for investing in high-end real estate apartments in Charlotte and the other similarly for investing a national hotel chain but in a specific hotel in Atlanta. Is this the canary in the coal mine ie peak for this ECM wave in real estate?
Keep up the good work
DK
ANSWER: Yes. Many went into real estate particularly to get rental income. They did the same in buying farmland and then renting it out for 5%. This was caused by the manipulation of interest rates to absurdly low levels. This is one of the issues I have pointed out in discussions in Washington and it has gone back to the Federal Reserve and is one of the reasons why the Fed has been raising rates. They MUST get them back to normal levels in interest rates or debt is really dead. Insurance and pension funds along with some banks have gone into the property markets and emerging market debt to compensate for the low interest rates.
I have been warning that the European and Japanese central banks have DESTROYED their bond markets. There is NO BID and capital has rushed off into other areas. Europeans have been big participants in the Dow Jones not just for the yield and price advance, but also for the currency gains as the Euro has faltered.
The last Documentary film I did was on this very crisis of destroying the bonds markets. The central banks were buying the government debt BECAUSE nobody else would at such low levels! They are shooting another segment of this film with some bond dealers we managed to get them to come out of the closet and speak since they just retired. I believe this film will be released as another feature in the movies.
Worldwide, we are witnessing a decline in property values. This is part of the crisis we face going into 2020. As values decline, you will see more of this attempt to entice a private investor to jump into a falling market. STAY OUT OF PROPERTY MARKET OFFERS!!!!!!!!
New Jersey is now the #1 state people are fleeing from because property taxes are insane and they will do nothing but rise. If you ever thought of moving to a lower taxed state – YOU BETTER DO IT before there is NO BID to try to sell your house.
