Merged: Is the worst of the Global Financial Crisis behind us?
Grandpa Aerotart
I am so happy you find me entertaining
I have not backed away from anything - when did I say I expected a 90% drop in Australian real estate? I did say I expected a 40% fall peak to trough.
I used Japan as an example of what can happen when a debt fuelled speculative bubble bursts. The US is another example where the bottom has not been reached and likely won't be for some time. I was listening tonight to a speaker in the US (one of those ahead of the curve types who cause market moves on Wall Street when they speak) who suggested, for a whole slew of good fundamental reasons, that US real estate might bottom out closer to a 50+% drop than the current 30+% drop.
You seem to believe Australia is immune - good luck to you
I agree with you that the interest rates are not going up anytime soon - down is more likely than up in the next while. The RBA has too much bad news on the unemployment/AUD fronts to seriously consider raising interest rates.
Just out of curiosity did you watch that vid linked to by Foie gras a few pages back - particularly Steve Keen in parts 6 and 7?
I have not backed away from anything - when did I say I expected a 90% drop in Australian real estate? I did say I expected a 40% fall peak to trough.
I used Japan as an example of what can happen when a debt fuelled speculative bubble bursts. The US is another example where the bottom has not been reached and likely won't be for some time. I was listening tonight to a speaker in the US (one of those ahead of the curve types who cause market moves on Wall Street when they speak) who suggested, for a whole slew of good fundamental reasons, that US real estate might bottom out closer to a 50+% drop than the current 30+% drop.
You seem to believe Australia is immune - good luck to you
I agree with you that the interest rates are not going up anytime soon - down is more likely than up in the next while. The RBA has too much bad news on the unemployment/AUD fronts to seriously consider raising interest rates.
Just out of curiosity did you watch that vid linked to by Foie gras a few pages back - particularly Steve Keen in parts 6 and 7?
Gnadenburg
Just for your info I do have a very nice property on Sydney’s Northern Beaches which I bought very close to the bottom of the market and I did move a great chunk of my loan to HK late last year when the AUD was near its lowest to the HKD and USD. So yes I have done nicely because of this, but it wasn’t from any advice I got here or street smarts or balls as you put it. It was because of my background and the fact I am constantly researching the markets that allowed me to get the timing roughly right. Do I think my property has or will continue to decline any further? Yes but I haven’t bought it to speculate a capital gain. It is a very long term investment and probably where I will retire when I have finished my stint here in Hong Kong.
Interest rates may be low now but the question you should be asking yourself is how high do you think they will go when they do rise? What makes you think for one moment governments around the world will be able to turn off their stimulus packages before inflation becomes a problem, and it will, or if the stimulus packages will work at all? Stagflation is a very definite possibility and a very ugly economic environment to operate in. Almost all the growth seen so far has been because of government stimulus. If the consumers don’t start spending soon without government handouts, particularly in the US and EU, we are all in for a very rough ride.
Well if you had of taken my advice, bought good Australian property last year and funded it with the USD, you could have currency switched and made a fortune.
For an ex-currency trader, living in Hong Kong, it should have been plain to see. But required street smarts and balls.
For an ex-currency trader, living in Hong Kong, it should have been plain to see. But required street smarts and balls.
But more importantly, cash flow has skyrocketed due halving of interest rates and rental hikes.
Grandpa Aerotart
The question should also be where would interest rates be if the feckless morons in Govt (both sides of the house) still calculated inflation the way it was calculated in the 70s/80s - i.e including housing/food and transport?
Those of us over a certain age remember interest rates around 18% - because inflation was high. Imagine what inflation would be now if they still included those things - it would be huge.
They took those things out of the calculation and told everyone inflation (Consumer Price Index) was 3%. All payrises since have been based on that BS CPI - if you were lucky, mostly employers have managed to average less than CPI increases - but those things they removed, housing, transport and food, have continued to inflate at an increasing rate. Had they not changed the calculation inflation in the last 20+ years would have (and has) been higher than at any time before that. Any wonder people don't feel better off?
Utterly contemptible lying c&*#s - ALL of them Labor or Liberal.
Likely this reason alone is the underlying cause of the GFC - unchecked inflation on the one hand and decimated real wages on the other.
Where is the outrage?
Those of us over a certain age remember interest rates around 18% - because inflation was high. Imagine what inflation would be now if they still included those things - it would be huge.
They took those things out of the calculation and told everyone inflation (Consumer Price Index) was 3%. All payrises since have been based on that BS CPI - if you were lucky, mostly employers have managed to average less than CPI increases - but those things they removed, housing, transport and food, have continued to inflate at an increasing rate. Had they not changed the calculation inflation in the last 20+ years would have (and has) been higher than at any time before that. Any wonder people don't feel better off?
Utterly contemptible lying c&*#s - ALL of them Labor or Liberal.
Likely this reason alone is the underlying cause of the GFC - unchecked inflation on the one hand and decimated real wages on the other.
Where is the outrage?
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lol real inflation now around 18% possibily more and the cash rate 3% me thinks its time to borrow lots and lots of money and put it hard assets.........property anyone??
nice one chuck
nice one chuck
Last edited by im sparticus; 11th Sep 2009 at 04:25.
Grandpa Aerotart
Well that is what people have been doing for decades - its not sustainable - as we're seeing now.
Buying an asset that produces a negative return is not 'investing' its speculating on a capital gain - absent the capital gain (which is unsustainable in the long term) its a disaster waiting to happen.
When the price of an consumer item, and thats all a house is, increases at a rate greater than wages sooner or later, and given the power of compounding interest its gonna be sooner, no one can afford it anymore and the price crashes back down to where its affordable again. This process has merely been pushed back by easy credit to the point where the price re set will be more spectacular and more economically damaging short to medium term.
You can thank your elected governments of the last 30 years for the policy settings that led to this madness.
Buying an asset that produces a negative return is not 'investing' its speculating on a capital gain - absent the capital gain (which is unsustainable in the long term) its a disaster waiting to happen.
When the price of an consumer item, and thats all a house is, increases at a rate greater than wages sooner or later, and given the power of compounding interest its gonna be sooner, no one can afford it anymore and the price crashes back down to where its affordable again. This process has merely been pushed back by easy credit to the point where the price re set will be more spectacular and more economically damaging short to medium term.
You can thank your elected governments of the last 30 years for the policy settings that led to this madness.
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you have not been able to do this ever let alone for decades otherwise the rba would have given all their money away and be broke at the very least the cash rate has to be equal to real inflation usually its a little above.
Chimbu chuckles
I think you will find it does include those items. What it doesn’t include though is the changes in taxation. The figure that is publicised by the RBA is “All Groups” though there is a separate figure that excludes housing and financial and insurance services.
Consumer Price Index, Australia, Jun 2009
The question should also be where would interest rates be if the feckless morons in Govt (both sides of the house) still calculated inflation the way it was calculated in the 70s/80s - i.e including housing/food and transport?
Consumer Price Index, Australia, Jun 2009
Grandpa Aerotart
% change Jun Qtr 2008 to Jun Qtr 2009
Weighted average of eight capital cities
Alcohol and tobacco 4.7
Clothing and footwear 1.3
Housing 5.2
Household contents and services 2.4
Health 5.2
Transportation -5.9
Communication 1.2
Recreation 0.7
Education 5.1
Financial and insurance services -6.6
All groups 1.5
All groups excluding Housing and Financial and insurance services 1.4
Weighted average of eight capital cities
Alcohol and tobacco 4.7
Clothing and footwear 1.3
Housing 5.2
Household contents and services 2.4
Health 5.2
Transportation -5.9
Communication 1.2
Recreation 0.7
Education 5.1
Financial and insurance services -6.6
All groups 1.5
All groups excluding Housing and Financial and insurance services 1.4
Chimbu chuckles
Very simply there are 90 grouping of like items that are measured. The prices are measured roughly once a month but if the item has a volatile price they may measure it more often. These grouping then have a weighting based on their importance. Every five years these weightings are varied based on changes in household spending patterns.
A GUIDE TO THE CONSUMER PRICE INDEX: 15th Series
Very simply there are 90 grouping of like items that are measured. The prices are measured roughly once a month but if the item has a volatile price they may measure it more often. These grouping then have a weighting based on their importance. Every five years these weightings are varied based on changes in household spending patterns.
A GUIDE TO THE CONSUMER PRICE INDEX: 15th Series
Grandpa Aerotart
1/. Groupthink
2/. Believing their own BS.
They have hardly distinguished themselves in the last few years as 'smart', cunning maybe but not very smart. 105% loans, Liar loans, CDOs, CDSs as an example.
Remaining solvent remains to be seen.
Fiat currency is debased every time the Govt prints another $ with nothing but sentiment to back it up. Every time a bank extends credit that is money created from nothing - mostly out of thin air - they leverage up deposits and lend many times more than they hold on deposit. Every $ created means every $ already created is worth a little less. All the major currencies now have < 5% of the original buying power.
An ounce of gold is currently 'worth' nearly $1000 when it was worth <$20 in the early 70s but buys now pretty much what it did then.
The above CPI list doesn't sum up to 20% inflation. For starters only 45% of residential property are mortgaged. But there is NO WAY KNOWN it adds up to 1.4% either.
2/. Believing their own BS.
They have hardly distinguished themselves in the last few years as 'smart', cunning maybe but not very smart. 105% loans, Liar loans, CDOs, CDSs as an example.
Remaining solvent remains to be seen.
Fiat currency is debased every time the Govt prints another $ with nothing but sentiment to back it up. Every time a bank extends credit that is money created from nothing - mostly out of thin air - they leverage up deposits and lend many times more than they hold on deposit. Every $ created means every $ already created is worth a little less. All the major currencies now have < 5% of the original buying power.
An ounce of gold is currently 'worth' nearly $1000 when it was worth <$20 in the early 70s but buys now pretty much what it did then.
The above CPI list doesn't sum up to 20% inflation. For starters only 45% of residential property are mortgaged. But there is NO WAY KNOWN it adds up to 1.4% either.
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I'm interested to see what effect the reduction in the first home buyers grant will have at the end of the month and coupled with that an interest rate rise or two. That scenario I think will make the picture a little clearer. I think the situation at the moment is a bit artificial with the influence of these two factors at play.
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$20oz gold in the 70's? I guess you finally understand why property prices are where they are today glad we finally got to the bottom of it.
Last edited by im sparticus; 11th Sep 2009 at 09:16.
Grandpa Aerotart
Got my start year and prices confused - 1833 was USD20/ounce, 1970 was USD35/ounce.
London Fix Historical - result
Ya think they'll stay there? I don't.
Edit: Don't know why that link isn't giving the data I sought to show and I don't have time to sort it - non the less a 57% inflation in gold between 1833 and 1970 as opposed to the inflation - USD35 to USD980 per ounce - seen in the last 39 yrs tells the story on recent govt policy.
London Fix Historical - result
I guess you finally understand why property prices are where they are today glad we finally got to the bottom of it.
Edit: Don't know why that link isn't giving the data I sought to show and I don't have time to sort it - non the less a 57% inflation in gold between 1833 and 1970 as opposed to the inflation - USD35 to USD980 per ounce - seen in the last 39 yrs tells the story on recent govt policy.
Last edited by Chimbu chuckles; 11th Sep 2009 at 09:35.
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i dont know those sorts of increases in the price of gold are unsustainable and seem an awful lot like the speculative bubble house prices are in and we all know property is about to crash, lol.
which is it chuck you cant have it both ways either there is rampant inflation and hard assets are fairly going up, or their speculative bubble is about to burst??
which is it chuck you cant have it both ways either there is rampant inflation and hard assets are fairly going up, or their speculative bubble is about to burst??
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What is this thread doing in Dunnundra - RPT - should be in Jet Blast and then bombed into oblivion.
No one seems to be listening to each other anyway.
Experiences seem to be too personal rather than macro-economic.
But that is just my view mind you.
No one seems to be listening to each other anyway.
Experiences seem to be too personal rather than macro-economic.
But that is just my view mind you.
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Here is the original thread starter that I posted:
Gnand and chimb just have differring opinions thats all. Nothing to do with Jet Blast
Is the worst of the Global Financial Crisis behind us?
I'm noticing where I work that things seem to have been improving quite a bit recently. It makes me wonder if the worst of the GFC is now past us. The share market seems to be steadily rising and some economic figures are pointing at a recovery. What do you think and how is it looking where you work?
I'm noticing where I work that things seem to have been improving quite a bit recently. It makes me wonder if the worst of the GFC is now past us. The share market seems to be steadily rising and some economic figures are pointing at a recovery. What do you think and how is it looking where you work?