| Author | Message | ||
     Dilsukhnagar Junior Artist Username: Dilsukhnagar Post Number: 434 Registered: 07-2008 Posted From: 162.119.64.100 Rating: N/A |
already india lo major cities like mumbai , calcutta, bangalore lo real estate prices slashed by 20 percent. only hyderabad , chennai are the two cities which are least effected till now . but hyderabad tansactions are not happening right now much . so we dont know the clear pictre in hyd. definitely there will be correction in hyd too. | ||
| Rajusk Side Hero Username: Rajusk Post Number: 3649 Registered: 02-2008 Posted From: 66.93.90.250 Rating: N/A |
Systemic reasons for deflation in Japan can be said to include: Fallen asset prices. There was a rather large price bubble in both equities and real estate in Japan in the 1980s (peaking in late 1989). When assets decrease in value, the money supply shrinks, which is deflationary. Insolvent companies: Banks lent to companies and individuals that invested in real estate. When real estate values dropped, many loans went unpaid. The banks could try to collect on the collateral (land), but due to reduced real estate values, this would not pay off the loan. Banks have delayed the decision to collect on the collateral, hoping asset prices would improve. These delays were allowed by national banking regulators. Some banks make even more loans to these companies that are used to service the debt they already have. This continuing process is known as maintaining an "unrealized loss", and until the assets are completely revalued and/or sold off (and the loss realized), it will continue to be a deflationary force in the economy. Insolvent banks: Banks with a large percentage of their loans which are "non-performing" (loans for which payments are not being made), but have not yet written them off. These banks cannot lend more money until they increase their cash reserves to cover the bad loans. Thus the quantity of loans are reduced and less funds are available for economic growth. Fear of insolvent banks: Japanese people are afraid that banks will collapse so they prefer to buy gold or (United States or Japanese) Treasury bonds instead of saving their money in a bank account. This likewise means the money is not available for lending and therefore economic growth. This means that the savings rate depresses consumption, but does not appear in the economy in an efficient form to spur new investment. People also save by owning real estate, further slowing growth, since it inflates land prices. |
