Aussie Dollar Plummets
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Plankbender,Which part of Spain?
I lived in Spain (in Alicante) and no one wanted to own a house or property.
They were indeed more interested in having a good time.
So who do we believe your BS or someone elses?
May be you lived there after the Spanish American War?
They were indeed more interested in having a good time.
So who do we believe your BS or someone elses?
May be you lived there after the Spanish American War?
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argusmoon, I think it depends more when than where..
Spanish culture is undergoing massive changes, not least because a generation of not-so-catholics is growing up and they're moving out earlier, and they're buying home rather than renting.
For reasons that elude me, the Spaniards have been jumping on the property bandwagon like no other people in Europe, at their peril as it now transpires..
I can only speculate that a lot of them got sucked in by early gains, and now they have whole new developments empty and tons of average wage "investors" broke..
Realos are the same anywhere in the world, you see.. never believe one or a used car salesman
Spanish culture is undergoing massive changes, not least because a generation of not-so-catholics is growing up and they're moving out earlier, and they're buying home rather than renting.
For reasons that elude me, the Spaniards have been jumping on the property bandwagon like no other people in Europe, at their peril as it now transpires..
I can only speculate that a lot of them got sucked in by early gains, and now they have whole new developments empty and tons of average wage "investors" broke..
Realos are the same anywhere in the world, you see.. never believe one or a used car salesman
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Nitpickers
Posters like Plankbender are what is wrong with a lot of forums like PPrune.
They take one small part of a post and criticize it.Totally ignore the rest of the well reasoned well thought out argument or position.
There has been some interesting discussion here.
Its certainly given me something to think about.
The Australian economy is the new kid on the block insofar as Western Economies are concerned.Maybe we are still figuring this real estate thing out.
The next generation wont be able to own a property.Staying home with Mum and Dad might be their go.Thats what Japanese kids appear to be doing.
All this is uncharted territory.These circumstances have never existed before(Im sure Plankbender will correct me if Im wrong).
No one really knows where we will end up.
They take one small part of a post and criticize it.Totally ignore the rest of the well reasoned well thought out argument or position.
There has been some interesting discussion here.
Its certainly given me something to think about.
The Australian economy is the new kid on the block insofar as Western Economies are concerned.Maybe we are still figuring this real estate thing out.
The next generation wont be able to own a property.Staying home with Mum and Dad might be their go.Thats what Japanese kids appear to be doing.
All this is uncharted territory.These circumstances have never existed before(Im sure Plankbender will correct me if Im wrong).
No one really knows where we will end up.
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Here We Go
Plankbender may be you should grow up.And no Im not related to either KB or the other guy.
Is ABX related to the bender then?What were we discussing?
The economy stupid.
Is ABX related to the bender then?What were we discussing?
The economy stupid.
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Certainly interesting to read different viewpoints.
I have two friends in different parts of the banking industry. Both intelligent, conservative guys. One (who has a more domestic focus) believes that the recession will be mild, and that economic conditions in oz are a lot better than preceding the recession 'we had to have'. The other believes that we will be lucky not to have a full blown depression.
Generally, I have found that when economists agree on something, it is almost certain not to happen. With commentators generally agreeing that we will have a recession (either mild or severe), that can mean only: Stable conditions/growth or the biggest depression ever!
Seriously, some strange statements here so far:
KB, you state that people will stop buying what they want, and only buy what they need. What effect do you think that will have on the economy? You agree, elsewhere, that there will be a contraction- but it will be a gentle deflation of the bubble, and not a "bursting". After either event, how do you think asset prices will compare (to now)? How does that sit with other people's thoughts on valuation-to-earnings ratios?
OzBD. Banks in oz have to have cash backing for housing loans???? Nup. Asset backing is different to cash backing. Especially when the asset is the debt. There are also mortgage providers (rams, wizard etc) who began without even the facility to take deposits. Credit is CREATED by banks. If more people understood this, they may be more interested in nationalising the banks. It was certainly a revelation to me when I learned this principle.
IMHO unemployment is the big thing to watch. If (when) unemployment begins to rise, the real deflation of asset prices will begin. The pointers are there that this will happen (Kleinfeld {Rio Tinto} yesterday decribing falling commodities prices as due to softening in Chinese demand and not seeing their govt intervening to stimulate activity until mid 2009!!= end of mining boom), but data always lags the reality. People have to have lost their jobs before it appears as data. Just look around and ask people in business how they are going, how their forward bookings are, hiring/firing etc is the best guide. The signs are always there, as long as you know where/how to look. Great way to get the jump on people who are insulated from 'us in the trenches' (economists, govt officials etc). Local bank managers used to be great at having their finger on the pulse- they were accutely aware of how small businesses were going (cashflows, overdrawn/default days etc) before these things showed up as 'data'.
My sources say it isnt looking good.
I have two friends in different parts of the banking industry. Both intelligent, conservative guys. One (who has a more domestic focus) believes that the recession will be mild, and that economic conditions in oz are a lot better than preceding the recession 'we had to have'. The other believes that we will be lucky not to have a full blown depression.
Generally, I have found that when economists agree on something, it is almost certain not to happen. With commentators generally agreeing that we will have a recession (either mild or severe), that can mean only: Stable conditions/growth or the biggest depression ever!
Seriously, some strange statements here so far:
KB, you state that people will stop buying what they want, and only buy what they need. What effect do you think that will have on the economy? You agree, elsewhere, that there will be a contraction- but it will be a gentle deflation of the bubble, and not a "bursting". After either event, how do you think asset prices will compare (to now)? How does that sit with other people's thoughts on valuation-to-earnings ratios?
OzBD. Banks in oz have to have cash backing for housing loans???? Nup. Asset backing is different to cash backing. Especially when the asset is the debt. There are also mortgage providers (rams, wizard etc) who began without even the facility to take deposits. Credit is CREATED by banks. If more people understood this, they may be more interested in nationalising the banks. It was certainly a revelation to me when I learned this principle.
IMHO unemployment is the big thing to watch. If (when) unemployment begins to rise, the real deflation of asset prices will begin. The pointers are there that this will happen (Kleinfeld {Rio Tinto} yesterday decribing falling commodities prices as due to softening in Chinese demand and not seeing their govt intervening to stimulate activity until mid 2009!!= end of mining boom), but data always lags the reality. People have to have lost their jobs before it appears as data. Just look around and ask people in business how they are going, how their forward bookings are, hiring/firing etc is the best guide. The signs are always there, as long as you know where/how to look. Great way to get the jump on people who are insulated from 'us in the trenches' (economists, govt officials etc). Local bank managers used to be great at having their finger on the pulse- they were accutely aware of how small businesses were going (cashflows, overdrawn/default days etc) before these things showed up as 'data'.
My sources say it isnt looking good.
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Not so in Australia...our exposure to sub prime was/is comparatively small.
None of our banks needs to be bailed out.Liquidity is a little tight.Thats not a bad thing.
The banks are solid...the real estate market is solid.The dole Qs havent lenghtened...nor will they lenghten appreciably over the next 12 months.There will however be a reallocation of labour.
None of our banks needs to be bailed out.Liquidity is a little tight.Thats not a bad thing.
The banks are solid...the real estate market is solid.The dole Qs havent lenghtened...nor will they lenghten appreciably over the next 12 months.There will however be a reallocation of labour.
ANZ, CBA, NAB and Westpac must come clean about their riskier exposures, especially in credit default swaps (CDS), Michael West writes
CDS and Aussie banks
A Citibank report from mid-July shows ANZ at the top of the CDS pile in Australia. It had $45.7 billion worth of CDS in its conduits.
While all the banks used CDS to hedge their credit risk, ANZ actively traded them.
In other words, as with its primacy in stock lending (of Opes Prime fame), it took the greater risks.
As of March, the bank had some $23.4 billion in ``long'' CDS positions and $22.3 billion in ``short'' CDS positions.
``ANZ entered short CDS positions with counterparties who desired credit protection whilst simultaneously purchasing offsetting protection for a cheaper premium from different counterparties (we understand these counterparties were "monoline" insurers on around half of all occasions). The spread differential between the short premium and long premium generated trading income,'' says the Citibank report.
When one such monoline insurer, ACA, was downgraded from investment grade to CCC in February 2008, ANZ was forced to recognise a provision of $226 million based upon a $1.5 billion notional contract value.
``In effect, they were saying that the long leg of the trade was not suitable in terms of providing insurance - as the rating of the insurer was sub-investment grade the hedge was no longer viable.''
As with other financial stocks now underperforming their peers, ANZ partied hard in the good times by indulging too much in high-yield securities. Now it is clear they were not high-yield for nothing.
Its rivals carry risk but not to the same degree.
CBA has $5.9 billion ($3 billion bought and $2.9 billion sold), Westpac has $4.9 billion ( $4.9 billion sold and $0.1billion bought) and NAB, which Citigroup rates second to ANZ on risk has $24.4 billion in CDS ($13.7 billion and $10.7 billion).
A Citibank report from mid-July shows ANZ at the top of the CDS pile in Australia. It had $45.7 billion worth of CDS in its conduits.
While all the banks used CDS to hedge their credit risk, ANZ actively traded them.
In other words, as with its primacy in stock lending (of Opes Prime fame), it took the greater risks.
As of March, the bank had some $23.4 billion in ``long'' CDS positions and $22.3 billion in ``short'' CDS positions.
``ANZ entered short CDS positions with counterparties who desired credit protection whilst simultaneously purchasing offsetting protection for a cheaper premium from different counterparties (we understand these counterparties were "monoline" insurers on around half of all occasions). The spread differential between the short premium and long premium generated trading income,'' says the Citibank report.
When one such monoline insurer, ACA, was downgraded from investment grade to CCC in February 2008, ANZ was forced to recognise a provision of $226 million based upon a $1.5 billion notional contract value.
``In effect, they were saying that the long leg of the trade was not suitable in terms of providing insurance - as the rating of the insurer was sub-investment grade the hedge was no longer viable.''
As with other financial stocks now underperforming their peers, ANZ partied hard in the good times by indulging too much in high-yield securities. Now it is clear they were not high-yield for nothing.
Its rivals carry risk but not to the same degree.
CBA has $5.9 billion ($3 billion bought and $2.9 billion sold), Westpac has $4.9 billion ( $4.9 billion sold and $0.1billion bought) and NAB, which Citigroup rates second to ANZ on risk has $24.4 billion in CDS ($13.7 billion and $10.7 billion).
Fears of Lehman's CDS derivatives haunt markets - Telegraph
Those on the wrong side of these Lehman debt contracts - known as credit default swaps (CDS) - must come up with the money by Tuesday, the next D-Day in the ever-fraught calendar of the credit markets. There has been a deafening silence so far.
There is no easy way of finding out who they are, so every bank and insurer is suspect. The $55,000bn CDS market is "completely lacking in transparency and completely unregulated" in the words of Chris Cox, the chairman of the US Securities and Exchange Commission.
The settlement auction on Lehman CDS contracts last week was in itself a bombshell. Creditors retrieved just nine cents on the dollar from the Lehman wreckage. As Naked Capitalism put it, the bank had "vaporised". The biggest players at the auction were Goldman Sachs and Deutsche Bank but they were almost certainly transacting for clients.
The insurers of the debt -- a third are hedge funds -- will have to pay 91pc of the $400bn in contracts.
The Depository Trust and Clearing Corporation says the risks have been exaggerated in headline scare stories, insisting that the total sum to be paid will be closer to $6bn. It says most positions are "netted out".
"That's not credible," says Andrea Cicione, credit chief at BNP Paribas.
"They keep coming up with these number by 'netting' but we think the amount is going to anywhere from $220bn to $270bn. The chain broke in the CDS market when Lehman Brothers went down. We may now see other counter-parties defaulting," he said.
There is no easy way of finding out who they are, so every bank and insurer is suspect. The $55,000bn CDS market is "completely lacking in transparency and completely unregulated" in the words of Chris Cox, the chairman of the US Securities and Exchange Commission.
The settlement auction on Lehman CDS contracts last week was in itself a bombshell. Creditors retrieved just nine cents on the dollar from the Lehman wreckage. As Naked Capitalism put it, the bank had "vaporised". The biggest players at the auction were Goldman Sachs and Deutsche Bank but they were almost certainly transacting for clients.
The insurers of the debt -- a third are hedge funds -- will have to pay 91pc of the $400bn in contracts.
The Depository Trust and Clearing Corporation says the risks have been exaggerated in headline scare stories, insisting that the total sum to be paid will be closer to $6bn. It says most positions are "netted out".
"That's not credible," says Andrea Cicione, credit chief at BNP Paribas.
"They keep coming up with these number by 'netting' but we think the amount is going to anywhere from $220bn to $270bn. The chain broke in the CDS market when Lehman Brothers went down. We may now see other counter-parties defaulting," he said.
The East is in the Red: the white-knuckle ride begins | smh.com.au
Traders who had been selling iron ore at around $US200 a tonne on the Tangshan spot market were struggling this week to make a sale at $US80. The Newcastle spot price for power-generating coal has plunged from nearly $US200 to $US110. Copper has fallen more gradually, by one half, and nickel by three-fifths. This week Rio Tinto's chief executive, Tom Albanese, shocked the London and Sydney stock exchanges by being the first major mining executive to warn that China would not recover before year's end.
"No, I did not predict the carnage at the moment," says Jim Lennon, Macquarie Bank's respected head commodities analyst. "Last week was the first time since records began that the Chinese spot market price for iron ore went below the Australian long-term contract price. The freight market has imploded. We've declared force majeure on the global commodities super-cycle."
Resource price rises that directly injected 2 or 3 percentage points of additional income into the Australian economy each year are swinging into reverse. "As the resources boom unwinds it will do significant damage to Australia," says Kieren Davies, a leading economist at ABN Amro. "The fall in national income will flow to weaker company profits and weaker business investment and cascade through the economy."
Most of the hundreds of Australian mining companies that have sprung up at the tail end of the resources boom will not survive. "A lot of the junior miners will run out of cash and go into liquidation as they will be unable to raise funds," says Linda Liu Bearne, an investment consultant whose clients include China International Capital Corporation, China's largest investment bank.
"No, I did not predict the carnage at the moment," says Jim Lennon, Macquarie Bank's respected head commodities analyst. "Last week was the first time since records began that the Chinese spot market price for iron ore went below the Australian long-term contract price. The freight market has imploded. We've declared force majeure on the global commodities super-cycle."
Resource price rises that directly injected 2 or 3 percentage points of additional income into the Australian economy each year are swinging into reverse. "As the resources boom unwinds it will do significant damage to Australia," says Kieren Davies, a leading economist at ABN Amro. "The fall in national income will flow to weaker company profits and weaker business investment and cascade through the economy."
Most of the hundreds of Australian mining companies that have sprung up at the tail end of the resources boom will not survive. "A lot of the junior miners will run out of cash and go into liquidation as they will be unable to raise funds," says Linda Liu Bearne, an investment consultant whose clients include China International Capital Corporation, China's largest investment bank.
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Australian Bank Activity
The ANZ has reduced its interest rates greater than the RB's 1%
The CBA is busy with its acquisition of Bank West
The merger with Westpac and St George is still on.
Nothing there would indicate portending drama.
Australia is not an economic island.There will be some changes in our economy.
But for all the reasons previously stated there should be nothing catastrophic
The CBA is busy with its acquisition of Bank West
The merger with Westpac and St George is still on.
Nothing there would indicate portending drama.
Australia is not an economic island.There will be some changes in our economy.
But for all the reasons previously stated there should be nothing catastrophic
Last edited by Ka.Boom; 18th Oct 2008 at 00:04. Reason: spelling
Back to the AUD.
55 cents if commodities unwind.
50 cents if additionally, there is a moderate correction to the housing market.
CBA forecasting 59 cents by 1st QTR next year.
55 cents if commodities unwind.
50 cents if additionally, there is a moderate correction to the housing market.
CBA forecasting 59 cents by 1st QTR next year.
the-east-is-in-the-red-the-whiteknuckle-ride-begins
From the same article
From the same article
So far the Chinese economy is rebalancing exactly as Mr Hu and Mr Wen wanted, although the pain threshold for unemployment cannot be far away. China has been the saviour of the Australian economy for five years or more and it will not be too long before it is again. The forces that are driving Chinese people to urbanise, escape from poverty and consume energy and mineral resources are far from over.
Earlier this year a team of 20 consultants at McKinsey & Company constructed a ground-up model of what China will look like two decades from now. By then China will have urbanised and another 350 million people will have moved from the countryside.
They will live and work in more than five million buildings in 200 cities that each contain more than 1 million people. Fifty thousand of those buildings are likely to be skyscrapers - "the equivalent to constructing up to 10 New York cities," says the McKinsey report, Preparing for China's Urban Billion.
The message, studied closely by Australian mining companies such as BHP Billiton and Rio Tinto, is that if you have been impressed by the gleaming towers of Shanghai and Beijing then you have seen nothing yet.
They will live and work in more than five million buildings in 200 cities that each contain more than 1 million people. Fifty thousand of those buildings are likely to be skyscrapers - "the equivalent to constructing up to 10 New York cities," says the McKinsey report, Preparing for China's Urban Billion.
The message, studied closely by Australian mining companies such as BHP Billiton and Rio Tinto, is that if you have been impressed by the gleaming towers of Shanghai and Beijing then you have seen nothing yet.
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Chronic Snoozer, long term it will be probably milk and honey.
But, if the demand for Chinese goods slows in the US, the slowdown in economic activity in China will be reflected here short to mid term.
KB's she'll-be-right comments are a little delusional IMO. Quite a large chunk of our have-it-now generation in Australia has a bigger household negative equity problem than the USA (more`debts than assets*). It will correct and there will be defaults. Kevin Rudd hit the panic button last week.
*Oh but my house is worth $600K. Bull****! Its unrealised paper assets. Put it on the market and see what you actually get for it.
Tinpis. It should be around $1.10L accounting for the flight from the AUD. So what about greed as a reason?
On the raison d'etre of this thread, currency traders are abandoning Commodity Currencies like the AUD. Unlike KB, they don't think its all hunky dory downunder.
Greedy bastards still being greedy?
But, if the demand for Chinese goods slows in the US, the slowdown in economic activity in China will be reflected here short to mid term.
KB's she'll-be-right comments are a little delusional IMO. Quite a large chunk of our have-it-now generation in Australia has a bigger household negative equity problem than the USA (more`debts than assets*). It will correct and there will be defaults. Kevin Rudd hit the panic button last week.
*Oh but my house is worth $600K. Bull****! Its unrealised paper assets. Put it on the market and see what you actually get for it.
How come were still getting ripped a $150-60 a litre for gas?
On the raison d'etre of this thread, currency traders are abandoning Commodity Currencies like the AUD. Unlike KB, they don't think its all hunky dory downunder.
The ANZ has reduced its interest rates greater than the RB's 1%
The CBA is busy with its acquisition of Bank West
The merger with Westpac and St George is still on.
Nothing there would indicate portending drama.
The CBA is busy with its acquisition of Bank West
The merger with Westpac and St George is still on.
Nothing there would indicate portending drama.
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Yen Carry trade
The $Oz tanked for two reasons.
1.The unwinding of the yen carry trade
2.The flight from high yield currencies due to(perceived) risk aversion.
Show me a country,any country,that is better placed to weather this perfect financial storm than Australia
1.The unwinding of the yen carry trade
2.The flight from high yield currencies due to(perceived) risk aversion.
Show me a country,any country,that is better placed to weather this perfect financial storm than Australia
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i'm surprised at the chicken little attitude of a lot of "mature" people (including experienced pilots) who should just get a grip.
2 points -
1.The headlines are being written by kids
and
2. it's not metastatic cancer!
2 points -
1.The headlines are being written by kids
and
2. it's not metastatic cancer!
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The $Oz tanked for two reasons.
1.The unwinding of the yen carry trade
2.The flight from high yield currencies due to(perceived) risk aversion.
Show me a country,any country,that is better placed to weather this perfect financial storm than Australia
1.The unwinding of the yen carry trade
2.The flight from high yield currencies due to(perceived) risk aversion.
Show me a country,any country,that is better placed to weather this perfect financial storm than Australia
Australia domestically over-leveraged and in debt beyond its years? massively!
Australian houses over valued by 60-80% and mostly over leveraged? What do you think?
Maybe Australias manufacturing base will save us? Remember Hoover and AWA plants?
Australia produces very few if any consumer big ticket items. TVs, Dryers, Sound Systems, Washers, Dishwashers etc...all foreign owned and often manufactured overseas (I think my Kiwi Fisher and Paykel top end stuff may be made here).
Sweden and Denmark. They make things of value, own them as as companies and export them.
Does that answer all Mr Firecat?
OK so how does that affect Australia's economy if China slows down?
Why no change (When you are almost 100+% geared in domest demand and we are almost now totally dependant on foreign demand of ...well...our DIRT)?
If you have a freehold house, and a big garden, then no problem.Not going to be able to widen your horizons for a while, but so what???
Last edited by Track Coastal; 18th Oct 2008 at 15:09.
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TC:Aggressive
Track Coastal your response is just a tad aggressive.
The biggest holder of $A until a few weeks ago were the Japanese.The aversion to commodities was the reason the Yen carry trade unwound.Firecat was half rightThe aversion was to risk.Which was also mentioned.
Take a bex old son and have a good lie down.
The biggest holder of $A until a few weeks ago were the Japanese.The aversion to commodities was the reason the Yen carry trade unwound.Firecat was half rightThe aversion was to risk.Which was also mentioned.
Take a bex old son and have a good lie down.