“Gating” is a phenomenon of the financial world whereby an investment fund stops you from withdrawing your capital. Usually this is due to them having, well, having been caught on the wrong side of economic trends. You can thank zero percent interest rates for creating a lot of such incidents in the coming days.
Ron Butler is a Canadian mortgage analyst who is well worth following.
Lots of redemptions means that investors are shedding risk, and a lot of these private lenders have a lot of risk on their balance sheets.
You’ll also see much higher interest rates, going from 7 to 8% to 12 to 13% in private lending, which is bad for many people and/or companies
Kate, thanks for the post. I read the G&M business and investment sections carefully but somehow missed the article. This is another red flag in our suspect real estate industry. The real estate sector in this country is going to crash big time, and will be a big part of the severe recession to come.
I have a PhD in economics, taught first-year macroeconomics for 33 years. As a retiree, I have a small, retail RRIF portfolio — with 85% of it in HISA cash, with the remainder in natural gas, oil and gold stocks. Russia is going to explode small tactical nuclear warheads this month, which will devastate stock markets. Private pensions will crash big time.
I think a few FOABs are more likely than tactical nukes.
“Russia is going to explode small tactical nuclear warheads this month, which will devastate stock markets.”
Get in early :
https://www.forbes.com/sites/qai/2022/08/30/how-to-invest-in-uranium/
One of the greatest most beautiful events this year is the end of NIRP/ZIRP at least outside of Japan (they’ll buckle, and that country is the other timebomb set to off in addition to Italy). We are going to see years and maybe decades of BS get stacked racked and burned. It’s not just bad companies that are going to end, but bad countries. And there will be great buying opportunities from real estate to stocks. Powell & Co are serious about ending this inflation. Markets are misjudging their resolve.
Lots of places are not giving people their money.. Its all disappeared into a environmental covid lockdown hole.. Apparently our ruling class wants war to wipe the slate clean.. Plan accordingly..
For those financial businesses that have abandoned thier core function and embraced woke, well, this ‘Gating’ thing could prove a godsend, er, satansend. They can blame their deplorable customers, the patriarchial swine, wanting their money back! And, the Gating stuff is in the fine print.
As part of a house move, I am doing the traditional clear-out of less than useful items.
One such is a file of research and real estate listings (primarily of houses in the North Okanagon, BC) I had copied in 2015 when I intended to move there. We are all aware of the ridiculous state of affairs related to house prices but even I was shocked to see homes with prices in the $350-400K range that now regularly are advertised in the $750-800K range ie a 200%+ increase in seven years. Of course they are not selling.
A big downturn has to happen, and when it does the mortgages of recently bought homes will be unsecured by the underlying asset. Does nobody remember what happened to mortgage backed securities in 2008?
Funny thing is, after MBS crashed in 2008, housing prices dipped a bit and then roared upward for the next 12 years. It seems more likely that inflation will erode our purchasing power and housing prices keep going upward, even if they fall when adjusted for inflation. Can’t knock the house of cards over.
I think I’m too old and hidebound, but I couldn’t put money behind an edgy financial analyst who uses the word “dipshits” in his newsletter. I’d want more of a Houseman, or a Gielgud, not Andrew Dice Clay.