Banks in Poland selling fewer mortgages in 2011, down 49%

Yes this is one of the many proofs,that it is a bubble. Unless,Poland get its act together and stop trying to compete with China as a low wage economy,people will just move to Germany or stay in Britain and Eire etc. I met a girl yesterday who was just back from 4 months work in Germany;she just stayed long enough to afford a (10 year old car)car. Soon people will be going on seasonal work to pay for the year's petrol.

So I get a mortgage from the Bank to buy a property. I pay a deposit of say 20% to the Vendor. Sign the paperwork and the bank pays the other 80%, bank has security on the property, vendor has his 100% price for the property, or do you think that the vendor accepted a "promisory note" from the bank? My promise to pay the bank X amount over the next 25 years is what the bank "leverages" on. How do you think the vendor got paid for the property?. Mortgages had to exist to be "re-packaged' into "sub-prime".

Do they seriously let you out without a supervisor?

This is proof of nothing, no one wants to live in East Germany, there are hundreds of articles about this going back more than 10 years, one of many below. Location, location, location - ghost towns are cheap.

A shrinking population and the tendency for people to move into big cities in western Germany has emptied out thousands of homes in small towns in the eastern region. - thehindubusinessline.com/opinion/article2627341.ece

no matter how many times you say Poland is in a bubble- it doesn't make it true.

Correct. Banks leverage the deposit - basically they print the money based on the security of the asset with a certain possibility that it will be repaid over the term of the mortage.


The money comes from the bank which prints it based on the fact that it now owns a new asset. The bank will be repaid by the lendor.

You seem to understand it, except for the fact that banks don't have 'cash' they have an ability to create money to lend, money which 'comes from the future' in the form of debt.

Alphaville has a mocking article about the fact that the general public has only now realised how this works

ftalphaville.ft.com/blog/2011/11/15/747991/on-the-demonisation-of-debt

Here's the article it refers to


Money has been privatised by stealth
guardian.co.uk/commentisfree/2011/nov/15/money-privatised-stealth

I agree that comparisons of pricing with East Germany are probably not that meaningful.

What is meaningful however is that Warsaw prices are now similar to Germany's three richest cities, Duesseldorf, Munich and Frankfurt yet wages are about 40% of the amount.

First-time buyers in Britain are struggling. House prices remain high, mortgages are hard to come by, and deposits are difficult to find. Many are now renting until long into their 30s, but survey after survey suggests that homeownership is still the ultimate goal for a British family. Yet in Europe's most economically successful country, Germany, renting is the norm. Is the grass really grüner on the continent?

As the Germans like to say, "Jein" - or yes and no. For a start, renting is not necessarily the cheap option. In thriving cities like Hamburg, Cologne and Munich, tenants might be spending up to half their wages on rent. And the prospect of paying a landlord well into old age appeals to Germans no more than it does to the Brits.

Regional variations are enormous - in Berlin, the rental property share is an incredible 90% of the total residential market, which obviously keeps prices down; even in prosperous Hamburg the rental market is nearly 80%. But in other states like Saarland and Rhineland-Palatinate, homeownership is almost 60%, the highest in Germany.

Secondly, the Germans keep the purse strings tight. Stringent lending requirements ensure there isn't an oversupply of housing finance available - lenders are risk-averse and normally require a deposit of 20% or substantial collateral, and proof of good earnings over several years, which for many would-be buyers is impossible.

guardian.co.uk/money/2011/mar/19/brits-buy-germans-rent

The banks cannot create the cash until they own/secure the asset. The asset is not secured until the bank gives the money to the vendor. The vendor "HAS" his money. The money has to exist before the bank can leverage it to a larger amount. Hence money/cash is provided by the bank , but you say the banks have no cash!!!. If the bank leverages the asset/interest, by selling it on to 10 different companies then fraud has been committed which explains a lot of the present financial crises. In your world it must be permanent credit. Were you an IT consultant for the EU?

Private debt is not really the main problem, even if you cannot pay your mortgage you are not going to owe the banks 380 billion euros like Greece or 1.9 trillion euros like Italy.

"If the bank leverages the asset/interest, by selling it on to 10 different companies then fraud has been committed which explains a lot of the present financial crises."

This by the way is the "Ponzi scheme", the house/land exists and still has its individual worth and is an asset, whether the value goes up or down is immaterial.

I love this anology of the debt crises:-

It is a slow day in a little Greek Village.

The rain is beating down and the streets are deserted.

Times are tough, everybody is in debt, and everybody lives on credit.

On this particular day, a rich German tourist is driving through the village,
stops at the local hotel and lays a €100 note on the desk, telling the hotel
owner he wants to inspect the rooms upstairs in order to pick one to spend the night.

The owner gives him some keys and, as soon as the visitor has walked upstairs,
the hotelier grabs the €100 note and runs next door to pay his debt to the
butcher.

The butcher takes the €100 note and runs down the street to repay his debt to
the pig farmer.

The pig farmer takes the €100 note and heads off to pay his bill at the
supplier of feed and fuel.

The guy at the Farmers' Co-op takes the €100 note and runs to pay his drinks
bill at the taverna.

The publican slips the money along to the local prostitute drinking at the bar,
who has also been facing hard times and has had to offer him
"services" on credit.

The hooker then rushes to the hotel and pays off her room bill to the hotel
owner with the €100 note.

The hotel proprietor then places the €100 note back on the counter so the rich
traveller will not suspect anything.

At that moment the traveller comes down the stairs, picks up the €100 note,
states that the rooms are not satisfactory, pockets the money, and leaves town.

No one produced anything.

No one earned anything.

However, the whole village is now out of debt and looking to the future with a
lot more optimism.

And that is how the bailout package works

Talking up Poland again...

WARSAW - Polish authorities criticized a decision by Moody's Investors Service to change the outlook on the Polish banking sector to negative from stable, saying the sector's condition doesn't justify the cut.

Moody's earlier Tuesday changed its outlook on Poland's banking system to negative to reflect its expectation that the banks' operating environment will deteriorate on weaker economic growth.

Moody's decision is "stunning and surprising" and may lower valuations of Polish banks, said Marek Belka, governor of the National Bank of Poland. The move was likely due to systemic problems in the euro-zone banking sector, while Polish banks are well capitalized, although the need of euro-zone banks to raise their capital ratios could limit the financing of Polish units, he told reporters.

My aim in these posts is to use my language skill to present you a more comprehensive European press view that you won’t get on other blogs. Hopefully, this gives you a more balanced perspective of what different European constituents are saying about the sovereign debt crisis.

I have already highlighted some of the issues being reported on Eurobonds. But I should point out that I believe the Germans are already considering Eurobonds despite official denials. The Germans want to explore all of the eventualities and will only discuss the palatable ones in public. The article in Der Standard from Austria points to this likelihood.

The other major story is contagion. The English-language press has had considerable coverage of downgrades in Portugal, France and Hungary. What they have not got a lot on is the contagion into eastern Europe. Poland’s currency is tanking as a result. Moreover, the halt of Austrian loans into central Europe is creating a credit crunch there which will negatively affect the economy irrespective of the macro fundamentals (which are poor due to real economy effects out of Euroland). Slovenia, a former model country in the east, is the other major target of contagion.

Euro-Schuldenkrise: Anleger fliehen aus polnischem Zloty – Rohstoffe + Devisen – Finanzen – Handelsblatt
“The Euro debt crisis has put the Polish Zloty under pressure. Blame is apparently on currency speculation. Poland fears crossing the permissible indebtedness mark of 55 percent of GDP.”

Source: creditwritedowns.com/2011/11/foreign-news-eurobonds-and-contagion-to-p oland-and-slovenia.html

If the zloty does tank there could be positive consequences for housing:

-foreigners will be more hesitent to sell their apartments, preferring to wait (as the price of apartments fall and the amount translated into their home currency also falls due to exchange)

-Poland might start to look attractive for foreign investment again (as in EURO, USD, GBP or whaterever the apartments will get cheaper combined with the fall in zloty prices)

-Polish people working abroad could get more zloty for the Polish savings, making housing less expensive
-people with Swiss Franc or other currency loans will continue to pay their loans off (they can't sell as they wouldn't have enough to pay off the loan)

Therefore a fall of the zloty could offer some support for housing prices if we believe the foreigners and Polish working abroad have such a large influence - personally I think these factors don't have as much influence as some would want us to believe.

Er you are forgetting interest rates? These will need to be hiked to support the currency and that will far outweigh all the other effects.

Which Euro? it looks like 8-10 core countries will setup a Financial Union (EU FU lol). that will be far stronger as it will exclude the PIIGS. This would be very attractive to Poland.

You're right - but most of what is written in this thread is nonsense - so I don't try too hard :-)

Reality today most people with money don't really have safe options how to invest it - people without money are basically in trouble

I'm not sure how/if this will ever clean up - while we may not repeat what happened in Japan - it really is impossible knowing what to do - while I feel apartment prices will drop, I do feel better being diversified (owning property and multiple currency savings and shares)

A sound strategy is 30 per cent each of cash/bonds, property and shares and leave 10 percent to invest in something high risk. Problem in uk, us, Ireland and now Poland is that people end up with much more than 50 percent tied up in their home. Taking equity out of your home was very rare until the late 80s.

you better believe it, what else could cause it....

So based on your quote we are all doomed, rich or poor, there are asset classes out there that perform well during times of uncertainty. Hard/alternatives have always been used by the wealthy as a preservation of wealth during inflationary periods.


That is called diversification and is the basis of capital protection, so as I understand your portfolio consists of real estate, currencies and equities. I would not touch equities in any market. It is highly likely December 2011 to March 2012 will be a blood bath. Study the charts and fundamentals.


Milky is 100% correct, the money sent home by overseas workers to Poland was helping drive the economy, it was serious money in the region of billions of PLN per annum. I am sure Milky can dig out the figure to support his claim here.

I have posted these figure, and if i get a chance i Will post them again later. I have also posted on the percentage of the Polish population that are at the property purchasing age,and on the age group that have emigrated since 2004, along with the 'amount' of people who have emigrated (or seasonally) since 2004. They are all the same age group. The facts are undeniable but ..........

Is it time to start the gold bubble thread?

forbes.com/sites/feeonlyplanner/2011/08/28/gold-bubble-or-not/

Final line: It is anybody's guess when gold will correct, but it is very likely that it will be ugly when it does.
Or should we sing the song of oil and silver and all the commodities.

End of the day trust people's addictions, I bought Philip Morris during the 2008 crisis and if we have another crash I'll double or triple my investment - even the freezing cold doesn't stop the smokers from smoking. Sure they have no problem renting - but somehow they always find the money to buy cigarettes.

I welcome all suggestions, what to do with $100,000 today (investing in any currency).

I reckon property or land(even in Poland),anything but flat cash.

Don't think I would want to invest in the zlote or euro....seems that currency investment is the way to go at the moment..

I think a bit of currency speculation in Poland will be worth the gamble right now.


wbj.

(Reuters) - The world's major central banks acted jointly on Wednesday to provide cheaper dollar funding to European banks facing a credit crunch as the euro zone's debt crisis drove EU ministers to urge more IMF help to avert financial disaster.

reuters.com/article/2011/11/30/us-eurozone-idUSTRE7AR0P320111130

telegraph.co.uk/finance/financialcrisis/8927148/Britain-has-entered-se cond-credit-crunch-confirms-Downing-Street.html

I don't know why the title uses 'Britain', but the world is hitting another crunch just like 2008. SHTF.

As only 40% of Poles have bank accounts and there is a huge black economy with cash that cannot be put into the banks, what is this supposed to mean? or, what point are you trying to make?

My point is, "Poles have nearly zł.1 trillion in savings".

According to "information", that banks have on 40% of the population? This is supposed to be accurate?

To keep on topic with this thread, is this post supposed to mean that the banks would make a mortgage decision, based on answering 40% of the questions when applying for a loan?. Not what I would call reliable statistics for a business transaction.

According to the world bank the population of Poland is 38.200.000.

40% = 15,280,000/ I Tril PLN average of 65,400 PLN per head, it is not a lot now is it.


It is combined assets, NOT savings in cash.

Its accurate for the people who have "cash, bank deposits, and savings in pensions and investment funds, as well as shares in public companies held by individual investors".

Poland has been taken to the European Court of Justice for failure to fully implement the EU directive on capital requirements and pay policy in financial institutions, and can face EUR 37,000 penalty per day of delay, the European Commission announced in a press statement.

Assuming that even some of the 40% have "emergency" funds tucked away, that still leaves assets and cash for the other 60% who do not use/trust banks. So the figures published would have to be a guess.