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blue skies

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Posts posted by blue skies

  1. I can feel a payrise coming on.

    Skills shortages a risk to economy

    A shortage of skilled workers could dampen Australia’s economic expansion, a new survey says. The Australian Industry (Ai) Group/Deloitte survey of more than 400 chief executives found 34.7 per cent of businesses believed there was at least a high risk that a skills shortages would have an adverse effect on operations this year. The level of concern rose to 47.5 per cent of all companies for 2015, according to the report, Skill Shortages: A high risk business, released today.

    Ai Group chief executive, Heather Ridout, said the lack of skilled employees was set to increase, which would be the number one danger to Australia’s economic growth.

    ‘‘Of particular concern is that shortages are intensifying in occupations associated with manufacturing, construction and engineering, which are pivotal to the Australian economy,’’ Mrs Ridout said.

    Santos Rises After Reports Shell May Take Gas Stake

    July 9 (Bloomberg) -- Santos Ltd., proposing a A$16.4 billion ($14 billion) gas project in Queensland, climbed the most in 19 months after newspapers reported Royal Dutch Shell Plc may buy a stake and become operator of the venture.

    Santos surged as much as 8.1 percent to A$13.79, the biggest gain since December 8, 2008. It was at A$13.69 at 12:33 p.m. in Sydney, compared with a 0.1 percent increase in the benchmark S&P/ASX 200 Index.

    Shell may spend A$2 billion to acquire as much as 35 percent of Santos’s Gladstone liquefied natural gas project, the Australian Financial Review said, without saying where it got the information. In a separate report, the Australian said the Hague-based Shell is competing with Korea Gas Corp. and China Petroleum & Chemical Corp., known as Sinopec, for a stake.

    “Shell probably have a better ability to deliver large- scale projects on budget and on schedule,” Mark Greenwood, an analyst with Citigroup Inc., said in a client note today. A pact “makes sense for Santos” because it reduces the competition for resources and increases the likelihood of further processing plants in the future, Greenwood said.

    http://www.businessweek.com/news/2010-07-08/santos-rises-after-reports-shell-may-take-gas-stake.html

    A survey of chief exectutives would you like more skilled workers on the market?

    Well ask a boss do you need cheaper workers?

    What do you think the answer will be?

    9 July 2010

    Media speculation regarding GLNG® project

    Santos notes speculation in today’s media regarding the GLNG project.

    GLNG remains in detailed ongoing discussions with a number of parties in relation to potential LNG

    sales, equity in the project and collaboration between projects.

    These discussions are incomplete and there is no certainty that definitive agreements will be

    executed by the parties.

    The company will update the market as appropriate.

    Ends

  2. Felt sorry for the young couple in Ireland, shattered dreams. At least they're young enough to 'start again' and at least they'll serve as a warning example to others in a similar situation.

    They may have trouble getting a lone to "start again"

    In all probability they may never aspire to own property again.

    I would explain that for generations the Irish have bein tennets, a reaction to this is the high value place on house ownership.

    Being a renter myself I understand the social and finantual pressure to buy.

    Is it being less than understanding to lable the young couple as fools. At the time buying made perfect sence. Rents sky high. property going up with and none of your freinds or media saying it will crash.

  3. Austerity for workers, tax cuts for business—Europe’s class policy

    8 July 2010

    A new report by the statistical office of the European Union, Eurostat, reveals that in the wake of the most serious economic crisis since the 1930s, European governments are continuing to cut corporate taxes while increasing the tax burden on the working population.

    Eurostat reports that European governments cut the average rate of corporate taxation across the continent from its 2009 level of 23.5 percent to a new record low of 23.2 percent. The reduction continues a trend which spans many years and has resulted in a major shift in tax policy.

    This is but one expression of the ruthless class policy being pursued by governments across Europe and internationally—whether nominally “left” or conservative—to make the working class pay for the crisis of the capitalist system. The result is ever greater levels of social inequality, as wealth is funnelled from the bottom to the top.

    Big business, the banks and the super rich are being increasingly relieved of paying taxes. The resulting deficits in state budgets, exacerbated by the hundreds of billions awarded to the banks in government rescue packages, are now being addressed through a combination of increased consumption taxes, which fall most heavily on the working class, and savage cuts in social programs and public sector jobs and wages.

    Initially, the European Commission set a target corporate tax rate of 45 percent. By 1992, the target had been revised downward to 30 percent.

    Over the past dozen years, corporate tax rates in Europe have fallen by nearly 12 percent. The current level of 23.2 percent means that the average rate in Europe is 10 percent lower than the nominal rate in the United States.

    Since the middle of the 1990s, Europe’s biggest economy, Germany, has reduced its corporate tax rate by a staggering 27 percentage points, while its top rate for personal income tax has been cut by 9.5 points. During the same period, Spain and France slashed their highest income tax rates by approximately 13 percentage points. Italy reduced its corporate tax rate by 20.8 points and its top personal income tax rate by 6.1 points.

    Commenting on the trend in German taxation, Peter Bofinger, a member of the German Council of Economic Experts, wrote in the Süddeutsche Zeitung, “If we had the tax rates that were in place in 1998, we would have 75 billion euros more revenue per year.”

    On Wednesday, the German cabinet met to discuss its plans to slash 81.6 billion euros from the country’s budget over the next four years. The plans involve major spending cuts in a range of social spheres, with disastrous repercussions for millions of workers and their families. The sum the government intends to save over four years is nearly equivalent to the annual loss in government revenues due to the lowering of corporate taxes over the past two decades.

    Thomas Piketty, professor at the Paris School of Economics, wrote: “We have tax competition in Europe, and the result is very simple: the mobile factor of production, i.e., capital, is taxed less and less; consequently, a less mobile factor like low-skilled labor is overtaxed.”

    This over-taxation of labor takes the form of regular increases in income and consumption taxes. According to the Eurostat report, average income tax rates increased across Europe to 37.5 percent from 37.1 in 2009. Value-added taxes also rose on average in 2009 by nearly 0.5 percent.

    Since 2000, 12 of the 27 EU countries have increased their taxes on commodities, with the highest rates of VAT (25 percent) currently being charged in Hungary, Denmark and Sweden.

    The contribution made by labour to state budgets is rising continuously. Currently, income tax payments constitute 40 percent of all state revenue. Consumption taxes account for an additional 25 percent. Business taxes amount to just 15 percent of state revenue. The invariable consequence of this development is the growth of inequality.

    Camille Landais, a French economist working at the University of California, wrote of an “explosion of top income shares” in France beginning in the late 1990s, in which tax cuts for business played a major role.

    In summing up this process, Landais noted that Europe is still far less unequal than the United States. “But the trend is in line with the trends in the United States since the 1980s. If the tax systems—which are much flatter than most people think—continue to be as flat as they are, it’s clear that in twenty years there’s no reason France and Germany wouldn’t be as unequal as the United States.”

    Author Göran Therborn argues that such extreme levels of social inequality are incompatible with democracy. Therborn points out: “The gap in income between those at the top and the average worker is now much wider than it was in pre-modern times. In 1688, English baronets had an annual income about one hundred times higher than that of labourers and out-servants, and 230 times that of cottagers and paupers. In 2007-8, chief executives of the FTSE top 100 companies received remuneration 141 times higher than the median income of all full-time employees in the UK, and 236 times higher than those of people in “sales and customer service occupations.”

    This orgy of tax-cutting for big business and the super rich was carried out by European governments of all political persuasions, but in the continent’s two biggest economies—Germany and France—it was nominally “left” governments which initiated the process.

    In Germany, unprecedented concessions to business and the banks were implemented by the Social Democratic Party-Green Party coalition led by Chancellor Gerhard Schröder (1998–2005).

    In France, it was the Socialist government (1997–2002), led by Prime Minister Lionel Jospin, which began the process of drastic cuts in corporate and high-income tax rates, which was continued by subsequent conservative administrations, up to and including the government led by President Nicolas Sarkozy.

    These supposedly “left” bourgeois parties are no less hostile to the interests of the working class and beholden to the financial elite than their conservative counterparts.

    The only solution to the growth of obscene levels of social inequality and the attendant threat of dictatorial forms of rule is the independent political mobilization of the working class across Europe and internationally to take power and carry out the reorganization of society to meet social needs, rather than the profit interests of the banks and big business.

    Stefan Steinberg

  4. Morre Bad News

    For the Bulls !!!

    Near full employment

    wages pressure increasing

    Unemployment falls to 18-month low

    AUD jumps two cents to day Why?

    Because lots of people think interest rates will be sure to go up next month.

    You know what that will do to the stalling house market.

    I don't think it will myself as I recon there will be more bad news from the US and europe.

    But who knows

  5. Hard to remember just what you say, your comments are so numerous.

    Mr Rudd was dropped for the simple reason the he would not win the comming election.

    One possitive off spin will be a harder line on boat people and a soffening of the carbon thingy.

    That is the price Miss Gillard will have to pay the power brokers

    The Government knows tax revenue will drop with the comming global down turn.

    Super taxs will come make no mistake.

    Hmmmmmmmmmmmmmmmm :P

  6. Emigration part of Irish life again

    Last Updated Jul 2010

    By: TCM Editorial

    THE ILLS affecting the economy in Ireland show no sign of alleviating.

    Since this time last year the Republic is €30billion further in debt, 60,000 more people are out of work, and roughly the same number have left Ireland to find work elsewhere.

    With unemployment continuing to rise, the numbers leaving the country will inevitably grow, with Britain being one of the main destinations.

    The demography of the Irish in Britain community will consequently change.

    However, if experiences of the past are anything to go by, our community will benefit from this influx, our ties with Ireland re-invigorated.

    But immigration also brings its own problems — many who arrive are not fully prepared for the challenges of life in Britain.

    The English novelist and art critic John Berger once said: “Emigration, forced or chosen, across national frontiers or from village to metropolis, is the quintessential experience of our time.”

    It certainly seems to be a defining feature of Irish life, and one that the community here in Britain know all about. But we must be ready, willing and able to play our part in giving a helping hand to those who need it.

    If the economic situation in Ireland continues to deteriorate, the new influx of immigrants will be a challenge to all Irish organisations, including ourselves here at The Irish Post.

    Welfare bodies in particular will have challenges ahead in making themselves relevant and supportive to new emigrants, and indeed the Irish Government should be lobbied to ring-fence grant money — from the cuts they’ve made back home — to aid this endeavour.

  7. Housing bubble deflates with a slow, steady leak :lol:

    THE housing "bubble" that was developing over 2009 and the early months of this year has begun to deflate. The most telling sign of course is that the topic of house prices has lost appeal in dinner party chat.

    More objectively, growth in bank lending for owner-occupied housing has fallen away sharply and auction clearance rates have eased.

    The cooling in the housing market is not a surprise.

    Housing interest rates have risen because of the six increases in the official cash interest rate since the worst months of the global financial crisis, and because banks have passed on the additional costs as their funding has shifted from wholesale money markets overseas to term deposits raised in the competitive Australian markets. As well, the generous grants to first-home buyers (which, as usual, mainly benefited vendors) have ended; "upgraders" are less active; affordability of housing is stretched; and though investor demand for housing is increasing, it's not picked up all the slack left by owner-occupiers.

    The debate is now on: will house prices collapse, as they did in Japan in the early 1990s and in the US recently, or is there a prospect of a long run of years with house prices moving mainly sideways?

    There's no shortage of shrill comment. The Economist magazine, which estimates the ratios of house prices to rents in 20 countries, reckons Australian house prices are the most over-priced, with our ratio now a massive 56.1 per cent above its long-term trend.

    In recent presentations in Australia Jeremy Grantham, co-founder of the GMO investment house in the US and an experienced researcher on the ups and downs in investment markets, suggested that our median house price needs to fall by 42 per cent to return the relationship between house prices and family incomes to its long-term trend. "Bubbles have quite a few things in common but housing bubbles have a spectacular thing in common, and that is that every one of them is considered unique and different," he says.

    The widespread use in Australia (and Britain) of variable rate mortgages adds an additional risk: "Sooner or later, the (interest) rates will go up and the game is over."

    The University of Western Sydney's Steve Keen has been strongly bearish on house prices for several years and retains his gloomy outlook: "It's only a matter of time before the [housing] bubble bursts."

    Certainly, a bubble was developing in housing late last year: the median house price needs to be affordable to households earning median incomes, and that was ceasing to be the case in Australia.

    There would be general agreement, too, that it's dangerous to argue that "this time it's different".

    But what is "normal" for movements in Australian house prices after the boom has peaked? My graph shows what happened to house prices following the collapse of the bubble of the late 1980s.

    Despite housing interest rates of 17 per cent, the median house price did not fall away sharply. Moreover, even with the marked fall in interest rates that followed, the earlier excesses were worked off slowly.

    Looking back on earlier housing bubbles, such as those of 1960, the early and late 1970s, the experience was broadly similar: house prices corrected mainly by remaining flat for a half dozen or more years.

    In international comparisons of whether house prices here are excessive, account needs to be taken of the high proportion of Australians who live in the main cities. Even over the long term, average house prices will be higher than if the population was spread over many cities and towns.

    As the deputy governor of the Reserve bank observed recently, most statistics "measure house prices in the city and express [the median house price as calculated] as a proportion of income in the whole country . . . if you do have prices relative to the incomes of people living in those areas, then the prices in the cities are quite reasonable."

    My guess is that house prices will generally repeat their earlier experiences and unwind from their recent excesses slowly and over time; a collapse in house prices seems unlikely.

    Some owner-occupiers who, late in the boom, borrowed heavily to purchase a house will feel financial strain.

    Some investors will be disappointed by the modest return on investment housing over a lengthy period. And, as always, prices of individual houses will vary a lot around the median level.

    Don Stammer chairs Praemium, the investment committee of INGIM's Multi Strategies Group and the advisory council of FIIG Securities. The views expressed are his alone.

  8. Hussman also warns that the US sharemarket could be on the brink of a slide as investors realise that the US economic recovery – and corporate earnings – are going to fail to meet optimistic expectations. “The overwhelming risk at present is that we are in what I've called the "recognition phase" where economic reality and earnings guidance deviates substantially form the expectations that have been priced into stocks. Two phases of a market downturn are generally the most hostile. The recognition phase and the capitulation (or "revulsion") phase

  9. SuitablyIronicMoniker

    Location: Australia

    Posts: 1,099

    Default USA Revisited?

    You can find lots of stories from 2006 or 2007 in the USA about housing. This one from the New York Times;

    http://www.nytimes.com/2006/07/15/business/15money.html (requires login)

    The USA was nothing like Australia today;

    Quote:

    As home prices appreciated from ridiculously high to unbelievably higher, more Americans began using mortgages that allowed them to buy more house for less of a monthly payment.

    Property investors with interest-only loans have nothing to worry about;

    Quote:

    With more homes on the market, prices could begin to fall. That reduces home equity — the difference between the amount borrowed and the total value of the home — and could force people whose loans change in 2008 and 2009 to consider selling, further accelerating the drop in prices. Some of those cities with the highest proportions of interest-only loans are also at the greatest risk of falling prices.

    Clever people - economists.

    Quote:

    Mortgage lenders, however, say they are not worried. Economists say even the worst-case outcome will not have much impact on the overall national economy.

    The problem will only affect a minority of people;

    Quote:

    Mr. Brunts said only a minority of mortgage holders will face real problems. Most will successfully refinance and though they will pay more, he thinks they will be able to make the payments.

    Delinquency rates are low;

    Quote:

    Mortgage delinquencies and foreclosures are still low nationwide and in the coastal states where prices appreciated the most.

    If you are a property investor, you may want to make a note of the last two paragraphs;

    Quote:

    It could happen if the price of the house has fallen or if the owner has been making only the minimum payment on a payment-option loan so that the loan balance has actually grown. (It is what the industry calls a negative-amortization loan). The best option then is probably to sell the house and scale back. Homeowners may also want to sell if they can clearly see that there is no way they can make the higher, refinanced payment.

    In that case, it is better to act now before a few million other interest-only mortgage holders dump their homes on the market.

  10. Naked capitalism and the scary model

    Steve Keen

    Published 6:29 AM, 6 Jul 2010 Last update 10:18 AM, 6 Jul 2010

    I met with Yves Smith of Naked Capitalism on the weekend, at a superb Japanese restaurant that only New York locals could find (and I'll keep its location quiet for their benefit – too much publicity could spoil a spectacular thing). Yves was kind enough to post details of my latest academic paper at her site in a post she entitled Steve Keen's scary Minsky model.

    Yves found the model scary, not because it revealed anything about the economy that she didn't already know, but because it so easily reproduced the Ponzi features of the economy she knows so well.

    I have yet to attempt to fit the model to data – and given its non-linearity, that won't be easy – but its qualitative behaviour is very close to what we've experienced. As in the real world, the model shows a series of booms and busts give the superficial appearance of an economy entering a 'Great Moderation' – just before it collapses.

    [Click to enlarge the image]

    click the image to enlarge

    The motive force driving the crash is the ratio of debt to GDP – a key feature of the real world that the mainstream economists who dominate the world's academic university departments, central banks and treasuries ignore. In the model, as in the real world, this ratio rises in a boom as businesses take on debt to finance investment and speculation, and then falls in a slump when things don't work out in line with the euphoric expectations that developed during the boom. Cash flows during the slump don't allow borrowers to reduce the debt to GDP ratio to the pre-boom level, but the period of relative stability after the crisis leads to expectations – and debt – taking off once more.

    [Click to enlarge the image]

    click the image to enlarge

    [Click to enlarge the image]

    click the image to enlarge

    Ultimately, such an extreme level of debt is accumulated that debt servicing exceeds available cash flows, and a permanent slump ensues – a Depression.

    There are four behavioural functions in the model that mimic the behaviour of the major private actors in the economy – workers, capitalists and bankers. Workers' wage rises are related to the level of employment and the rate of inflation; capitalists' investment and debt repayment plans are related to the rate of profit; and the willingness of banks to lend is also a function of the rate of profit.

    The model is explicitly monetary – with bank accounts for workers, bankers and capitalists – and the crisis is marked by a collapse in deposits and a rise in inactive bank reserves.

    [Click to enlarge the image]

    click the image to enlarge

    [Click to enlarge the image]

    click the image to enlarge

    The same phenomenon is evident in the data, though the sharpness of the turnaround is far greater than can be replicated by the smooth functions in my model.

    There's a lot more work to do before the model is complete – notably including the impact of a government sector that can add its own spending power to a depressed economy – but its basic features fulfil Minsky's challenge:

    Can "It"– a Great Depression – happen again? And if "It" can happen, why didn't "It" occur in the [first 35] years since World War II? These are questions that naturally follow from both the historical record and the comparative success of the past thirty-five years. To answer these questions it is necessary to have an economic theory which makes great depressions one of the possible states in which our type of capitalist economy can find itself.

    This is the first economic model ever that meets Minsky's standards for realism. Its final stage emphasises a message that Michael Hudson, one of the very few others to see this crisis coming, puts very simply: "Debts that can't be repaid, won't be repaid". As Americans now seem to be realising, the financial crisis has not gone away, because the debt that caused it is still there.

    Having got ourselves into a debt-induced economic crisis, the only permanent way out is to reduce the debt – either directly by abolishing large slabs of it, or indirectly by inflating it away. I have very little confidence in the ability of the Federal Reserve to do the latter, while the former will take a level of political fortitude that is far beyond our current politicians.

  11. Australian Real Estate Bubble Bursting?

    By Duncan Davidson|Jul 6, 2010, 3:48 AM|Author's Website

    The land of Oz is called the Lucky Country, and it could not have been clearer during the past two years as the Great Recession barely touched the shores down under. In the past two months, however, the real estate market has taken a sharp dip, and may be signaling the beginnings of trouble. Could there be danger lurking just below the surface?

    This drop has been essentially ignored in the global business press as the travails of the Euro, the fall of stocks and the repudiation of Obamanomics by G20 have led the headlines. Softness in the Oz property market began earlier this year as the central bank raised rates, causing a slight drop in price of 2.7% in Q1. Recently home sales have dropped and a glut of homes has emerged in major cities, including Melbourne and Brisbane, although not in Perth, the center of the resource river to China.

    The tenor of these stories is still positive, and it seems the newspapers down under got more animated over a rainfall of drunken parrots than the potential drop in housing. Such should be expected in a Lucky Country – bad news needs to slap them in their faces to be taken seriously. But I have heard anecdotal evidence of sharp drops in the 15-20% range, such as from this recent comment, and the softening of the market is leading to predictions of a “record fall in house prices” in Q3 and Q4. A similar fall is also seen for the other Lucky Country, New Zealand.

    There have been warnings, such as a warning reported in early May in The Australian. The most interesting debate has been between the Roubini of Oz, Steve Keen, and plenty of glass-half-full property pundits. Keen has been very visible in Australia warning of a housing bubble as early as 2008, and has suffered the Chicken Little fate of being premature in his calls. He lost a bet on the price collapse and had to endure his Walk of Shame recently. He may now be getting ready for the last laugh, as his predictions seem to be starting to be realized.

    Keen notes how Jeremy Grantham just pricked the Oz real estate bubble, and uses the following chart to show how bubblicious Oz property has become:

    Australian Real Estate Bubble Bursting?

    It is clear that Oz property has been on a tear, but the cause is not the Lucky Country so much as playing catch-up with US mortgage debt levels. Since 1990 Australians have increased mortgage debt as a percent of GDP three times faster than the US, and have now reached similar levels to those of the peak of the US bubble in 2006. It is clear that not all the drunks are parrots – the whole country has been on a bender:

    Australian Real Estate Bubble Bursting?

    Steve Keen attributes the rise in part to gimmickry of each new Prime Minister: first the Hawke government (Labour) in 1988 pushed an incentive for homebuyers that spiked sales; then the Howard government (Liberal) repeated this in 2001 (not, however, as a way to launch his new government since he had been in power for a while by then, but as part of post-dot-com reflation policies), and now Rudd (Labour) began his short regime with a similar giveaway to create happy voters following the change of government:

    Australian Real Estate Bubble Bursting?

    The last twelve months have shown, however, an accelerating fall in loans to homeowners (vs landlords), meaning real demand is falling below actual supply. Rudd’s incentive last year cleared out the buying interest, and along with those drunken parrots the sky may be beginning to fall on the Australian property owners:

  12. Australian first-home buyers face 4.5 year savings wait to buy property

    It's a beautiful view, but it will cost you with the average couple now needing 4.5 years of savings to buy in Australia / AAP Source: AAP

    * Young Australians kept in rental trap

    * Booming market "double edged sword"

    * Housing unaffordability soars further

    * Join us at 2.15pm rates coverage

    HOUSING affordability has worsened during the past year, with first-home buyers needing to save 10 per cent more for a deposit, a report shows.

    It was now taking 4.5 years to save for a 20 per cent house deposit, up from 3.7 years in the previous annual report.

    Australian couples need to raise $85,800 deposit for a median-priced house, compared with $78,100 a year earlier, the Bankwest analysis showed.

    Enlarge Join us at 2.15pm AEST for the rates decision: Special guest Yellow Brick Road's Mark Bouris will answer all your interest rate questions

    The situation was worse in more expensive parts of Sydney, Melbourne and Perth, with first-time buyers needing to spend a decade saving up for a deposit to enter the property market in 26 local government areas.

    Start of sidebar. Skip to end of sidebar.

    Related Coverage

    * Experts: RBA to hold rates

    End of sidebar. Return to start of sidebar.

    Australia continues to be one of the most unaffordable places in the world to buy a house due to a chronic undersupply of housing, Bloomberg reports.

    The median price of a home in an Australian city is about $468,000, according to RP Data show, almost double that of the median price of a home in the US, Bloomberg reports.

    Units more affordable but still expensive

    Saving for a median-priced unit was marginally less daunting, with first-home buyers needing to find $76,900 for a deposit - a four-year task.

    Bankwest Retail chief executive Vittoria Scott said a growing army of first home buyers were being locked out as established property owners benefited.

    "This is the stark reality of a strong Australian property sector," she said.

    Still, home borrowers are likely to have some relief today.

    The Reserve Bank is widely tipped to leave interest rates on hold at 4.5 per cent as it focuses on Europe's debt worries instead of domestic inflation.

    Booming market is a double-edged sword

    Bankwest retail CEO Vittoria Shortt said the study exposed the booming market as a double-edged sword.

    "While it's clearly of enormous benefit to established home owners, it's the complete opposite for many of their children. Many potential first home buyers are facing long periods in the rental market," Ms Shortt said.

    She said the problem had deepened since first home owners grants were now back at pre-financial crisis levels and house prices had risen.

    "Our research shows a 25-year-old hoping to buy a home will be almost 30 when they actually achieve that goal," she said. "It now takes longer to save for a house that it does to complete some university degrees."

    REIV chief executive Enzo Raimondo called on governments to increase first home buyer grants for existing homes and cut stamp duty for first home buyers.

    Read more: http://www.news.com.au/money/property/melbourne-home-buyers-face-five-year-savings-wait-to-buy-home/story-e6frfmd0-1225888257373#ixzz0srlH8Bd4

    Blue Skys said "Yes only when the last of the sucker money is spent will the whole thing go up in flames".

  13. Are house prices really invincible?

    July 5th, 2010

    Author: Jeff Taylor

    According to Harvey Jones of lovemoney.com the UK property market is invincible. Not due to any scientific analysis but more because of our irrational view to the ownership of property in Britain.

    “Perhaps the most astonishing thing about the credit crunch is the relatively mild impact it has had on the housing market.” He rightly says. He points out the long term damage that the economic downturn has had on the stock market, pensions, savings, salaries and employment. But how come the UK property market has been spared so far?

    When the recession came many people hoped that it would put an end to the madness of 125% home loans and income multiples for mortgages of over five times salary. Then it was surmised prices would have to come down. Well to an extent that is what happened. 125% LTV loans did go and the income multiples insisted on by mortgage lenders started to get more sensible. House prices also began to fall. But miraculously even with credit tightening and a further squeeze possibly on the way, house price buoyancy recovered and still remains.

    There are many factors at work, supply and demand, the number of cash or big deposit buyers, the overall number of transactions etc but the big one always remains – a house is only worth what the buyer will pay and the seller will allow it to go for. Many people forget the second part of that statement.

    We are in a position at the moment where sellers can afford to wait and hang on. They have valued their house and will not sell for less unless forced to do so, even if it means waiting a few years.

    With job losses coming and possibly higher interest rates there will be downward pressure on house prices. But the government will be working double overtime to try and limit the effects. This may lead to the consequence of government action inadvertently continuing to hold house prices up. After all that seems to be what has happened thus far.

    What we may see is a stagnation of prices where inflation gradually erodes the value until traditional stability is reached. That won’t help frustrated buyers today but may be good for the economy in the long run.

    Read more: http://www.economicvoice.com/are-house-prices-really-invincible/50011503#ixzz0soR0vOCP

  14. Home>>Columnists >> Li Hong's column

    Be steadfast in curbing home bubbles

    16:31, July 05, 2010

    Email | Print | Subscribe | Comments | Forum

    By Li Hong

    China's economy is not faltering or girded for a major slowdown, as some have feared, because of Beijing's ongoing high-note fight on housing market speculation, and a seemingly halting global economic recovery from the 2008-2009 Great Recession.

    On the contrary, the world's No 2 economy is set for an ideal "soft landing" – from an overheated first-quarter expansion of 11.9 percent to a sustainable growth of around 10 percent in the second half of 2010. Health of a global economic engine of China is by all accounts more important than blind pursuit of speed. It is desirable that China's growth has slowed to about 10.8 percent during the second quarter, and the third- and four-quarter growths are expected to reach 10 percent, as predicted by most economists.

    Premier Wen Jiabao said lately on his South China inspection tour that China is facing a "complicated" dilemma in conducing macro control policies. His concern is logical as the outside recovery in the United States and Europe is slipping, which will restrict China's export shipments later, and Chinese government's avowed clampdown on property market irregularities is to affect domestic investment and home-related consumption.

    But, the slightly slowing economy should not warrant a repeat of the giant stimulus spending the country has seen in the aftermath of the financial crisis, and flooding China's local governments with bank loans, as some Chinese newspapers have anticipated. The last wave of extraordinary government stimulus and monetary policy has saddled China's bank system with an unprecedented risk of local government borrowing.

    All the more, Wen's government is suggested not to upend its efforts of cooling the real estate industry. The moratorium, now in place, on loaning to third and more homes, and imposing higher mortgage rates on second homes (10 percent more than the first home) must not change, although, the much-heated discussion involving all homeowners triggered by Beijing's leaked intent to launch a property tax, may take the back-burner now.

    The State Council, which Wen leads, should this time dissipate the powerful lobbying forces planted in the government who represent the filthily wealthy real estate tycoons, and be steadfast in rectifying China's problematic urban home market. Provided the government keeps on the restrictive credit policy for another 12 months, hoarding of homes by the speculators will become extremely difficult, and the skyrocketing home prices will spiral down, eliminating a potential catastrophic US-style time bomb.

    It is normal that the economy is to slow down proportionately with a suddenly weakening housing sector, which, for many years has been a major driving force of China's dynamic economy. Since Beijing's announcement on April 16 to implement the "New Home Policy", home sales in most Chinese big cities have dropped by more than 40 percent to date.

    The policy should continue. Only after the bubbles are squeezed out, health of the home market, and coherently of China's overall economy, could be regained.

    After we have witnessed the boom and bust of American housing sector in the first 10 years of the new century, and its dreadful impact on the strength of a superpower, China will find it is absolutely necessary to carry on its macro-control policy on homes.

    To make up for the housing slack, the State Council will resort to other measures to nurture growth. I would rather not recommend the government come back to the previous tax-reducing policy to instigate auto sales (for vehicles are jamming up streets and poisoning the air, and contributing to global warming, too), Beijing could increase benefits to new energy development and consumption, revs up investment on high-speed trains and urban metro construction, and give more tax breaks to families to inspire consumption.

    And, Beijing is expected not to raise the benchmark bank interest rates any time soon considering the tepid global growth is sputtering, Europe's entangled in sovereign debt woes and China's own growth has clear signs of slowdown. Record-low rates will continue to generate vigorous private sector investment and public consumption.

    As the economic settings will remain stable and there is no danger of a hard-landing – a free drop of the economy, Beijing could count on its resilience and adeptness to shepherd a growth, say, at roughly yearly 10 percent, which fits China fairly well.

    The articles in this column represent the author's views only. They do not represent opinions of People's Daily or People's Daily Online.

  15. 75pc of first loans in NAMA not being paid off

    By John Mulligan

    Monday July 05 2010

    JUST one-quarter of the €15.3bn first tranche of loans transferred to NAMA are being repaid, despite the banks' assurances that 40pc were performing.

    The revelation means that 75pc -- or €11.5bn worth -- of loans transferred to the toxic assets agency by financial institutions are no longer being actively repaid.

    And it raises the prospect of taxpayers getting a smaller return on their massive investment after NAMA's expected 20-year lifespan expires.

    The borrowers involved in the first tranche included big-name property developers and investors such as Liam Carroll, Sean Mulryan, Bernard McNamara, Gerry Gannon, Derek Quinlan and Treasury Holdings, which is owned by Johnny Ronan and Richard Barrett.

    A second tranche of loans worth about €13bn is due to be transferred to NAMA within a couple of weeks.

    NAMA has been forced to forensically examine each loan in that tranche in order to assess its viability.

    It also emerged that the toxic debt agency will pursue tenants directly in developments such as shopping centres, in cases where the owner took out a loan to build the site, but has stopped repayments.

    The first tranche of NAMA loans was transferred in May by financial institutions Anglo Irish Bank, Bank of Ireland, Allied Irish Banks (AIB), EBS and Irish Nationwide.

    It is understood that the five institutions participating in the scheme had initially informed the government agency late last year that 40pc of loans it was to take over from them were 'performing', meaning that repayments were being actively made by the borrowers.

    It has now emerged that some advice given by the banks in relation to the loans was inaccurate.

    Only 25pc of the €15.3bn in loans is now being serviced.

    That means that there is an extra €2.3bn of loans which is not now being financed by the original borrowers.

    The dramatic variance between the figures provided by the financial institutions and the ultimate reality detected by NAMA has caused considerable surprise in the government agency. It has since examined each loan to determine its precise status.

    In its original business plan, NAMA had informed the Department of Finance that it could be in a position to return a €4.8bn profit to the Exchequer after 20 years.

    Revise

    However, the number of loans not being serviced has forced it to revise that figure.

    In a best-case scenario, it is now believed that a profit of about €2bn could be returned, and in a worst-case scenario NAMA could make a loss of around €200m.

    It has also transpired that banks had been able to force tenants to pay rent directly to them in cases where the borrower who owned the property was not making repayments.

    For example, if a developer built a shopping centre using a bank loan and stopped making repayments, the bank could go straight to the shop tenants themselves.

    However, it is understood that none of the institutions exercised this power, but that NAMA will now begin to pursue the tactic where appropriate.

    A total of €81bn worth of loans will have been siphoned to NAMA by February next year.

    - John Mulligan

    Irish Independent

  16. Stop telling porkies again I have never ramped buying Santos shares, you really are a two bob merchant after all. I suggested buying QGC and Arrow before they got taken over if you care to look. I know Santos a lot better than you think I do. And I know that they are a target for a takeover since the Santos act was abolished in SA legislation two years ago.

    Absolutely I am doing the rain making bit right now as a sabbatical but will be back into hydrocarbons like a rat up a drainpipe and I will do it in Brissy. I have chased oil and gas all over the world so I am destined for a large slice of the pie when it is in my back yard and yes I know and have worked in a ll of the coal seam methane gas fields, yes all of them.

    I am really happy for you

    So you dont have Santos shares? What buy price would you have on STO?

    So you dont think there is going to be more drops in the share and property market?

  17. '

    the minerals tax is far lass socialist and also doesn’t include oil and gas which seals my fate in the QLD coal seam gas boom I will now retire on that.

    Please tell about the time you started ramping Santos STO it was $15 ? now trading at $12.

    Santos I would buy at $8 but above it dosnt look like value.

    Are you as positive about Gas & Oil as you are about Housing?

    Oil & Gass shares , property are good investments, but I hope will see the double dip or it may turn out 10 years of small drops.

    I will only buy if I get a bargain

  18. What's the reason behind the AUD's massive rise against sterling lately?

    Many here are some:

    Quantitive easing of the Sterling.

    Carry trade, deposite Interest rates are 6.4% at call.

    Comodities, (minerals) have increased in price, pushing up the share market.

    Debt levels for the government are low compaired to world standards.

    However Australia is looking into the abiss and the abiss is now looking at Australia.

    The AUD is not called the Pacific paso or the Aussie Battler for nothing.

  19. Hard to remember just what you say, your comments are so numerous.

    Mr Rudd was dropped for the simple reason the he would not win the comming election.

    One possitive off spin will be a harder line on boat people and a soffening of the carbon thingy.

    That is the price Miss Gillard will have to pay the power brokers

    The Government knows tax revenue will drop with the comming global down turn.

    Super taxs will come make no mistake.

    Yep Super taxs will come make no mistake!

  20. The fact is that that tax was dropped, that is indisputable'

    Can you remind me in what other things I was wrong about.

    Read this : looks like you have got it wrong again!

    New tax even more of a super profits tax

    SYDNEY, July 2 AAP

    July 02 2010, 2:45PM

    The compromise hammered out by the government and the mining industry means the new Minerals Resource Rent Tax (MMRT) is more of a super profits tax than the Resource Super Profits Tax (RSPT) it will replace.

    Not that there is much evidence now that the federal government has removed virtually all traces of the original proposal from its websites.

    Even Treasurer Wayne Swan's announcements on May 2 now, rather clairvoyantly, include hyperlinks to the new plan announced exactly two months later.

    In any case, the new plan is more of a super profits tax.

    The original was more in the nature of an enforced partnership.

    The government was to allow mining firms a return of the government bond rate (around five per cent at present) in their investments before creaming off a 40 per cent share.

    The other 60 per cent would be tax normally as company profits.

    In return, the government would refund, as a tax credit, 40 per cent of any shortfall below the bond rate for 40 per cent of the project.

    In effect, the government was to be a partner, borrowing the funds for its 40 per cent share from the mining company at the bond rate, paying interest on the loan, then taking 40 per cent of the profit while wearing 40 per cent of any loss.

    The government is less of a partner and more of a tax collector under the new proposal.

    There is now no refundability of losses, so the government will no longer potentially share in a mine's losses as it would have under the RSPT.

    On the other hand it will rake in less tax.

    The 40 per cent rate has been cut to 30 per cent and the commodities taxed will be valued "at the mine gate".

    The new uplift factor for losses carried forward - the result of negative cashflow early in a mine's life, when capital spending is undertaken but revenue has not begun to come in - will add seven percentage points to the original proposal of the bond rate.

    And those carried-forward losses will be boosted further, thanks to the government's decision to allow the mining companies to calculate their returns on existing projects using the market value of their investments rather than the book value, and for the value of investments made from July 2012 to be written off immediately.

    In that respect, it is more of a "super profits" tax than the original, because the effective hurdle for profitability has been lifted significantly.

    But not only will the actual tax rate be lower, but the taxable part of profits will be further reduced by 25 per cent, a move which "recognises the contribution of the miner's expertise to profits at the mine gate", according to the statement released jointly by Prime Minister Julia Gillard and Mr Swan on Friday.

    The tax will also now be restricted to bigger and more profitable projects, those with resource profits exceeding $50 million.

    Only four commodities will be affected, and only two will be taxed under the MMRT - coal and iron ore.

    Oil and gas, both onshore and offshore, and including coal seam methane, will be brought into the existing Petroleum Resource Rent Tax (PRRT).

    The reduced range of commodities and $50 million profit threshold mean, in the government's estimation, that only about 320 businesses will be subject to the resource rent taxes, rather than an estimated 2,500 previously.

    Among those 2,180 no longer troubled by resources rent taxes will be some who will no longer eligible for the resource exploration rebate, which the budget estimates in May valued at an average of $601 million annually in the three years beginning 2011/12.

    Another casualty of the concession made by the government will be the cut to the corporate tax rate from the current 30 per cent to 29 per cent, rather than 28 per cent as originally planned under the RSPT.

    This means a company earning a profit in 2013/14 will pay 3.6 per cent more tax - 29 cents in the dollar rather than 28 - than it would have under the previous proposal.

  21. Didn’t I say that Kevin would get the bullet, well now he has and we have a Barren Taffy Chick running the show.

    Unless there is some amazing PR it looks like curtains for the tax raisers. What’s the betting super profit tax gets chopped as well ?

    Hey just because the government changes the name of this tax and moves the % arround doesnt mean it bein axed.

    I would say that once again you are wrong.

  22. Perpetual, never-ending growth is what our capitalist economic systems are based on and have been since at least the start of the industrial revolution.

    However, growing resource contraints mean there will be no new growth.

    The debts can never be repaid

    Our economies are f*cked

    And so are we

    Steve Hi!

    I have followed your posts and value them.

    Expendentual growth is impossible.

    The world , We are all heading for disaster.

    Do you know the story of Pandoras Box?

    Well after letting all of the missery that affects us, Pandora lets the last thing out.

    Hope

    During the the war things were looking dark for us . My Grandfather was asked why dont we giveup?

    Because we have hope.

    We must all do what we can for ourselfs, you have said as much yourself.

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