patrick.net

OO, which fixed income AUD investment is paying 8%?
CD type of instrument?bond?

I see 6.8% being paid on the NAB savings account check it out:

http://www.nab.com.au/Personal_Finance/0,,83377,00.html?ncID=ZBA

We havent seen rates being paid like that since pre-911. been screwed ever since.

Look, attack of the eco-terrorists!

http://www.reuters.com/article/environmentNews/idUSN0340672420080304

I hope they bought carbon credits before lighting those fires.

HelloKitty,

It's called TD in Australia.

Right now ANZ is showing 7.9% for 12-17 months
http://www.anz.com/aus/promo/Start-Saving-Now-With-An-ANZ-Term-Deposit-2/

ING direct showing 8.1% for 12 months
http://www.ingdirect.com.au/savings/our_products/term_deposits.htm

Westpac is showing 7.55-7.8% for 11 months
http://www.westpac.com.au/internet/publish.nsf/Content/PBTSSA+Term+Deposit+rates

Commonwealth is offering 8% for 12 months
http://www.commbank.com.au/personal/rates-fees/term-deposit-rates.aspx

TD=Term Deposit=CD.

Why are my comments on TD rates getting moderated?

Right now ANZ is showing 7.9% for 12-17 months
http://www.anz.com/aus/promo/Start-Saving-Now-With-An-ANZ-Term-Deposit-2/

ING direct showing 8.1% for 12 months
http://www.ingdirect.com.au/savings/our_products/term_deposits.htm

Westpac is showing 7.55-7.8% for 11 months
http://www.westpac.com.au/internet/publish.nsf/Content/PBTSSA+Term+Deposit+rates

Commonwealth is offering 8% for 12 months
http://www.commbank.com.au/personal/rates-fees/term-deposit-rates.aspx

I hope they bought carbon credits before lighting those fires.

LOL!

Jimbo Says:
As soon as Bush was sworn in, I moved most of my 401k into foreign stocks.

And if Obamillary gets sworn in, are you planning to bring it back to USD stocks?

BayAreaIdiot Says:
With regards to Zillow - I’ve also noticed the reverse of what SP describes. Houses Zestimated much higher than they would sell for.

That is not the opposite of what I said. I have said for a long time that houses are selling for less than the zestimate.

What I noticed lately is drastic drops in the zestimates - some as much as 20% in 30-days - in the Prime! Googlaire! fortress! areas.

What I noticed lately is drastic drops in the zestimates - some as much as 20% in 30-days - in the Prime! Googlaire! fortress! areas.

Perhaps their latest-and-greatest valuation model uses GOOG and AAPL as inputs. :)

@OO, Thanks for the commodities tips. What about just plain old CD's in non-USD? Any ideas - besides ANZ?

Also, transfers out of the country have to be declared - which I have complied with. But are you aware of any implications, beyond having to declare interest income? I mean, if I parked $20K in (say) Hungarian Zlotys, and earned no significant interest, what exactly happens? What if 2 years later, I convert that stash back to $90K USD (thanks to Bernanke's dollar-raping) - is that capital gains?

I am fine with just leaving the assets sitting in CH and emigrating to some place else if SHTF here, but am curious about what happens if I do decide to bring the money back here...

Peter P

When I was in England in the mid 90's, up to $72,000 earned by an American overseas was exempt from US Taxes. No tax was due to Britain either for bank interest earned by an American. So, if an American stationed in England moved his savings to Barclay's he would get a higher and untaxed interest rate. The risk would be the pound falling, but the pound went from $1.35 to $1.55 while I was there. This tax treatment may have been based on SOFA, and may not apply to someone not stationed overseas.

OO,
thanks for the tips. Is interest income gains taxed by AU government AND feds after converting/declaring my money? there has to be a catch....but I really really need to diversify out of USD.

Everbank offers aussie CD's with federal FDIC protection but rates are in fives ( which is 2 points better than usd cd)

OT

Patrick, that Landoverbaptist site in today's links, is a riot!
Too funny!

"...a skeet range in the backyard for the kids."

Bernanke Urges Banks to Forgive Portion of Mortgages (Update3)

March 4 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke, battling the worst housing recession in a quarter century, urged lenders to forgive portions of mortgages held by homeowners at risk of defaulting.

``Efforts by both government and private-sector entities to reduce unnecessary foreclosures are helping, but more can, and should, be done,'' Bernanke said in a speech to bankers in Orlando, Florida, today. ``Principal reductions that restore some equity for the homeowner may be a relatively more effective means of avoiding delinquency and foreclosure.''

Bernanke's call goes beyond the stance of the Bush administration and previous Fed comments. By comparison, the central bank's Feb. 27 report to Congress called for lenders to ``pursue prudent loan workouts'' through means such as modifying mortgage terms and deferring payments.

The Fed chief highlighted the threat posed by home values falling below mortgage balances, something Treasury Secretary Henry Paulson played down yesterday. Bernanke said the ``recent surge'' in delinquencies has been ``closely linked'' to the slide of home equity.

"I thought the ETN ruling was about foreign currency notes."

You're right, sorry. The IRS has yet to rule on commodity ETNs The currency ETN ruling doesn't bode well for them receiving favourable treatment. The bottom line is investors should consider the possibility that ETNs won't get cap-gains tax treatment.

http://www.marketwatch.com/news/story/tax-advantages-etn-investments-question/story.aspx?guid=%7BB54182F3-3946-4CC0-A7A5-73DAE68D45CB%7D

"Principal reductions that restore some equity"

Sure great. When I signed the papers I thought it would go up and up and up but now that it isn't happening no less than the Fed Chairman himself is going to bat for me! Riskless investment I tell ya! It's the only way to go.

So it IS... possible to renegotiate the price of the home AFTER you've already purchased it! O.K, that's ONE thing we wrong about!

PermaRenter Says:
Bernanke Urges Banks to Forgive Portion of Mortgages: Federal Reserve Chairman Ben S. Bernanke, battling the worst housing recession in a quarter century, urged lenders to forgive portions of mortgages held by homeowners at risk of defaulting.

I swear, sometimes I wonder if Bernanke suggests outrageously bad ideas just to make other, merely run-of-the-mill bad ideas seem like sage advice...

Or, (to paraphrase Gamal Abdel Nasser) the genius of you Fed Banksters is that you never make clear-cut stupid moves, only complicated stupid moves which make the rest of us wonder at the possibility that we might be missing something.

"make the rest of us wonder"

Oh I'm lost I assure you. This is so uncharted (it may not even be water that we're a' floatin' on?)

If we allow every FB in peril to get a "principal reduction" how does that support home values? Be it through a short sale, foreclosure or price-reduced sale it ALL drives down comps/values! Right? Will their property taxes be adjusted accordingly?

Deferring payments? Total damage control! The only "logic" I can see SP is that they're desperately trying to keep people attached to those homes rather than let them go BACK to the bank and in turn rent out to the same people or different party in near, if not identical circumstances.

so bernanke is advocating residential cram downs initiated by the bank. wow.

im pretty sure this is an awful idea. if it becomes as common as short sales, wouldnt the default rate skyrocket by FB's? I can imagine they would adopt the position of 'either cram down my principal 200k or I walkaway'.

The YouWalkAway.com people might expand into negotiating workouts/cramdowns by next year.

If I see late night ads on TV advertising negotiating your principal reduction services from attorneys it will mean the end of the world is near. The same people advertising tax settlements are probably watching this closely. It sounds like an FB's wet dream to help them stay in the big home they cant afford.

Bernanke is such an academic. Theoretically he is correct. Banks may ultimately lose less if they forgive some principal today. The Banks, however, rightly argue that if they forigve some today, they ill have to forgive some more tomorow, then more the next day . . .

I think that by ging throgh the trevails of massive Bank pain we will get the stronger lending standards and regulation (I like the new Indepenedendt appraisal Cuome netioted Fannie and Freddie to accept) we need to ensure this does not ahppen again.

PRS.com!

Principal Reduction Services

1-800-Don't-Pay!

Doesn't this break about a hundred different regulations? Who determines who and who doesn't get their loan crammed down?

When I was in England in the mid 90’s, up to $72,000 earned by an American overseas was exempt from US Taxes. No tax was due to Britain either for bank interest earned by an American.

Thanks. But you will have to live in UK too.

Could be worse.

"Cramdown" could evolve into a scheme where the amount of principle forgiven by the bank is paid out of a government "Mortgage Victim Assistance Superfund." Superfund could be financed by a tax on savings account balances.

HK,

I don't see how even a cram down would help most on a teaser rate loan? Even though there might be a substantial reduction in the amount owed/financed... the amoritizing payment on a 3,500 s/f home would STILL be more than these people can afford.

However! If this means driving down prices and the banksters take it in the shorts, well then so much the better.

Oh I’m lost I assure you. This is so uncharted (it may not even be water that we’re a’ floatin’ on?)

"may not even be water" LOL !

I am relieved that I am not the only one confused here. I am never hide in the bunker mentality but I don't know what kind of financial planning will be the best route going forward. I am sticking to "well-diversified", not because I believe in it as much as I did, but simply because I don't have any other idea. I am a bit overweight in commodities and global bonds, but that's about as much tweaking as I have done.

The additional problem (!!) is I can afford to buy a house I like now with a 20% dp and 30 yr FRM. Previously I had no choice but to wait. Now the way prices are dropping even in the "desirable" areas, it's very tempting to keep waiting. Getting into FRM debt may be the best protection from the impeding inflation. It's definitely a nice problem to have :-)

SP :

I know I have promoted MERKX many times before. But have you looked at it ? It invests in short term European bonds and has a sizable position in GLD. I have done extremely well over last 2 years using this as a means of having some cash in non-USD currency.

HK and SP,

the best way to convert money is to wire to a third country (e.g. Singapore, Hong Kong, any tax-free zone), do the conversion electronically, and wire into your destination country in the form of the currency intended for that country. I don't know about other countries, but Australia only taxes flat 10% all interest income by non-resident alien, and you can apply that amount of tax to your tax obligation to Uncle Sam. I believe most countries operate this way to avoid double taxation.

Prior to 2005, Australia doesn't tax you on your exchange rate gains, so doing the conversion in Oz was fine, things have changed obviously. Hong Kong and Singapore, for example, has no capital gains tax nor interest tax for non-residents. You just use the country as a conversion base.

In the end, you will be subject to capital gains tax when you repatriate your money back to the US, in USD. Let's be frank, if the capital gains tax is so enormous for fund repatriation back to the US, I believe emigration would be an option actively considered because that means USD has become almost worthless. But until you need to do the principal conversion back to USD, there is no worry about paying capital gains tax.

Your overseas interest income declared in the US, however, is marked to market (IRS has several options for you to choose, average, day of reporting, etc.)

Seems to me like the cram down is the most reasonable plan they've come up with yet. As long as it's not government sponsored, and not mandatory.

It allows the 2 parties who are responsible for the mess to meet halfway. I doubt this would do any good to those who kept refinancing their $300K loan until it was $800K. Nor would it do any good for those whose teaser rates are about to expire who couldn't even afford the teaser rates.

What it could do is help the people who could afford their loans, but might be in trouble during the coming economic slowdown. It could help smooth out a massive capitulation... which Randy H believes is coming in the summer.

While for those with their cash in hand waiting for a more massive crash it may not be the best thing... I still think those wishing for housing to crash more than 40% from the peak in a short period of time should beware what they wish for.

DinOR Says:
March 4th, 2008 at 9:11 am
"So it IS… possible to renegotiate the price of the home AFTER you’ve already purchased it! O.K, that’s ONE thing we wrong about!"

I have to admit, I never saw that one coming.

I think Headset is right on target.

The crammed down principal will be paid from the bailout fund (direct to the lender/investor) so the holder of the mbs is happy, the FB is happy. The only losers are the renters who save money and pay taxes as usual.

maybe i wont move to france, Austrailia is lookin good - they are RAISING interest rates to fight inflation. And perhaps an american accent is 'cool' there, anyone know?

HK,

Australia is definitely much more Americanized than people think

However, since its citizenship has been in very high demand in the last decade, immigration is becoming difficult. They raised the bar on education, job needs, money, etc. quite a few times.

What I like the most about Australia is, it has almost no illegal immigration problem. Well, if you can swim across the strait and make it through the sharks, I think you deserve a chance down under.

When I was working overseas, I believe the exemption was $82,000. However, you need to pay SS and medicare from the first dollar.

The Congress is talking about taking away such an exemption. I won't be surprised that such a "deal" will disappear in the next few years as Uncle Sam searches hi and low for extra tax income.

I won’t be surprised that such a “deal” will disappear in the next few years as Uncle Sam searches hi and low for extra tax income.

They should search hi and low for services to cut.

Well, if you can swim across the strait and make it through the sharks, I think you deserve a chance down under.

So maybe we should put sharks - or piranha - into the Rio Grande?