Jim Sinclair: QE3 To Infinity-The Final End Game

[beefsteak]

Yours truly finds this Donovan quote rather odd, and quite telling frankly. One should note this is being dished up courtesy of the London Financial Times.

Peter O'Donovan, of independent financial advisers Bestinvest, said: "It is possible that we may be heading towards a very surreal situation where lenders may end up having to pay borrowers as they head into negative interest.

Here's why it's "odd."

I've personally sold real estate in the past (homes and farmland) at negative interest rates (also called teaser rates) in order to help a young family to get into my home after I'd already moved out and into another place. Of course, it was always accompanied by a 5 year balloon payment. So, said buyer "either would get caught up and pay me" OR I'd get the real estate back. All the while, I at least collected SOME interest on my former home, and at the same time it was NOT vacant, which would invite vandalism, etc., lowering my equity. So, the thought of banks "paying borrowers" is not a foreign one, nor one to be dreaded. The dread for the homeowner is the inevitable and always disclosed BALLOON payment. They had to sign a separate piece of paper stating that they understood at the time of signing that they were in this negative interest rate deal with me, as an owner.

The part I find quite telling is that this concept is being postured as some "new mortgage wrinkle" package.

In my mind, that is only "a wrinkle" in the eye of the inexperienced reader. In otherwords, this particular scenario --as I suspect many other current headlines-- is being packaged for the unawakened, and part of the overall "scare mongering" currently running rampant among the sheeple who has never sold RE this way.

While this is a possibility, the reality is, the bankers have NOT disclosed what the "catchup/balloon payment" gig will look like. I do not expect the banks to tolerate this negative interest rate payment scenario for long. I suspect, there is some "fine print" clause which will be involved, to "kick out said mortagee" or "lease back" etc. One doesn't have to feel sorry for the banks in ANY interest rate scenario.

Afterall, aren't they holding millions of properties currently who have NO owners, and no inhabitants. Doesn't seem to be hurting their "profitability" since the bankers are still making money hand over fist at the overnight Fed Discount Window, and just allowing the properties to sit vacant until "things change." Heck, they are even demolishing properties upon which they hold mortgages. How's THAT for a wrinkle? LOL

Jis' sayin'