Jump to content
House Price Crash Forum

blue skies

  • Posts

  • Joined

  • Last visited

Posts posted by blue skies

  1. So you are now lecturing me on real estate contracts...........................thanks for the training course.

    I would like to see you buy a house in bayside Melbourne in the current market, with you eastern European negotiating tactic.

    Now you may think I am big noting myself and live in a fantasy................but you certainly come across as a two bob type living in dreamtime.

    You better be careful with your mental anguish or else your toes will start deforming and you know what that means..

    Sounds like you got yourself a real bargain at the top of the bubble. You show your ignorance about realestate negotiating and Iam a old Australian not a new one like you!

    Talk is cheep it takes money to buy beer. For myself I have few illusions, things may or may not go my way.

    Over time I have watched how start a argument by a intentional misunderstanding on your part and than try to disrespect and belittle your target.

    I have this mental image of you a lonely single middle aged man venting his anger at the key board and building a world of imagination : family, wealth, position.

    Yes Bardon you are full of it

  2. Bardon

    You can put $10 on a offer to buy the money is held by the agent not the vender, let me explain the deposite is to make the contract binding.

    Once a unconditional offer is acepted by the vender that is it. there can be no walking away, That is what it is to put your signiture and money down on a contract.

    you live in a fantisy!

    trying to big note yourself.

    I recon you suffer from a mental disorder.

  3. Armageddon

    by Martin D. Weiss, Ph.D. 02-22-10

    Martin D. Weiss, Ph.D.

    If you thought Wall Street’s debt crisis was traumatic, wait till you the see the consequences of Washington’s debt crisis!

    Never before in history has a world power like the U.S. been so utterly buried in debt! And never before has that debt been financed so massively by foreign investors!

    Nineteenth century Mexico, Spain, and Argentina accumulated so much debt, they were forced to default.

    In the 20th century, a similar fate befell Germany (1932) … China (1939) … Turkey (1978) … Mexico again in 1982 … Brazil and the Philippines (1983) … South Africa in 1985 … plus Russia and Pakistan in 1998.

    Argentina kicked off the 21st century with a default in 2001. And barring a euro zone rescue, Greece, Spain, and Portugal are prime candidates for debt defaults this year.

    But in NONE of these examples did we — or do we — see the debt crisis striking a dominant world power! In ALL cases, the debts represent little more than a small fraction of the total debts outstanding worldwide.

    Not so in our case today!

    In the entire world, the United States government and its agencies have, by far, the largest pile-up of interest-bearing debts ($15.6 trillion), the largest accumulation of unsecured obligations (over $60 trillion), the largest yearly deficit ($1.6 trillion), and the greatest indebtedness to the rest of the world ($4.8 trillion).

    In proportion to the size of its economy, one important country, Japan, does have more debt than the U.S. But unlike Washington’s debts, nearly all of Japan’s are financed by its own citizens — loyal, long-term savers who are far less likely to pull out in a storm.

    External Sponsorship

    RED ALERT: Financial Crisis NOT Over Yet!

    Don’t kid yourself …The Great Recession is still in full force …

    Now is the time to prepare your portfolio!

    If you want Weiss Capital Management’s independent view on the economy and markets so you’re ready for the next move — be sure to watch this important investment briefing:


    Presented by:

    Weiss Capital Management

    This Webinar goes offline

    this week … DON’T miss it!

    Go Here To Watch Now

    Washington’s debt crisis represents a unique, unparalleled, and unimaginable convergence of circumstances. Because no one can answer this simple question being asked by former GAO chief David Walker:

    Who will bail out America?

    Not you, not me, and not 300 million Americans! Not China, not Japan, nor all the powers on Earth put together! They’re simply not big enough. They don’t have the money.

    Yet, despite the utter gravity of our plight,

    nothing is being done to change our course.

    In recent weeks, Congress could not even agree to study the issue. They could not vote on a deficit commission.

    The president has just appointed a separate commission. But even after moons of deliberation, it will have no authority to bring its recommendations to a vote in Congress — let alone get them passed.

    The president says that the effort must be bipartisan, that all options must be on the table, and that no cows can be sacred.

    And indeed, this song sounds good. But it’s more out of synch with political reality than rap rock at the Bolshoi Ballet:

    * Democrats vow never to cut to Social Security or Medicare …

    * Republicans vow never to accept tax hikes, and all the while …

    * Economists swear that only a full-court, frontal attack on the deficit has any chance of making a dent.

    Irving and Ike

    My family and I — plus many others more illustrious than us — have been warning about this danger since 1960.

    That was the year my father, J. Irving Weiss, founded our Sound Dollar Committee, organized a nationwide grassroots movement, and helped prompt 11 million telegrams, phone calls, and letters of protest to Capitol Hill.

    That was the effort which persuaded Congress to vote for a balanced budget and helped give President Eisenhower a victory the likes of which has never been seen again.

    In subsequent years, Dad and I nagged, cajoled, and testified before Congress so often I lost count.

    Irving Weiss

    I think we gathered more evidence and made more phone calls than a telethon phone bank.

    But our warnings have typically been given little more than the time of day.

    And always — ALWAYS — the so-called “solution” has been the same: more borrowing from Peter to pay Paul, more can-kicking down the road, more smoke and mirrors, more lies.

    The Consequences of This

    Complacency Are Catastrophe

    To whit …

    Consequence #1. Due to the avalanche of government borrowing to finance the deficit, there is no power on Earth that can avert sharply higher interest rates.

    Irving Weiss

    Already, despite the weakest post-recession recovery in memory, bond prices are plunging and their rates are surging.

    Just a few weeks ago, the yield on 30-year Treasury bonds busted through a declining trend that had not been penetrated in more than 20 years.

    And just last week, it came within a hair of its highest level in over two years.

    With just one more, ever-so-slight nudge to the upside, all heck could break loose in the Treasury-bond market. You could see a surge in long-term interest rates that will make your hair curl.

    If the U.S. economy could boast a booming housing market or low unemployment, this would not be such a shock.

    Or if consumer price inflation were surging, it would also not be so unusual.

    What’s so damning about this action in the bond market right now is the fact that it’s coming at the worst possible time.

    That’s why Washington and Wall Street fear it so much. That’s why they’re so anxious NOT to tell you about it.

    Consequence #2. All long-term bonds — whether issued by other government agencies, corporations, states, or municipalities — will also collapse, driving their yields through the roof.

    Reason: When Uncle Sam has to pay more to borrow, they inevitably have to pay more as well.

    Consequence #3. Rates on mortgages and car loans will surge. Why? For the simple reason that they’re also tied at the hip of long-term Treasury rates.

    If you want to take out a 30-year fixed mortgage (now close to 5 percent) on a median-priced home ($178,300), and you can afford a 10 percent down payment …

    * Just a 1 percent rise in rates will drive your monthly payment from $861 to $962 …

    * A 2 percent increase will drive it to $1,068 …

    * And the kinds of rate increases possible in a bond-market collapse could drive it to levels only Midas could afford.

    Worse, if you go for variable-rate mortgages, balloon mortgages, or other now hard-to-get alternatives, the impact of surging interest rates will be even more traumatic.

    Consequence #4. The fledgling recovery in housing and auto sales — the pride and joy of Washington’s bailout brigades — will be toast.

    Consequence #5. Institutions and individual investors holding piles of lower yielding long-term bonds will get killed. That includes:

    * U.S. households stuck with $801 billion in Treasuries, $979.5 billion in municipal bonds, plus a whopping $2.4 trillion in corporate bonds.

    * Banks and credit unions holding $199 billion in Treasuries, $228 billion in munis, $1.066 trillion in corporate bonds and, worst of all, $1.408 trillion in government agency (and GSE) bonds.

    * Insurance companies buried in Treasuries ($196 billion), munis ($444 billion), agency bonds ($469 billion) and a TON of corporate bonds — $2.180 trillion.

    * Private pension funds, state and local governments, and even their employees’ retirement funds — all loaded with similarly vulnerable bonds.

    Not all of these holdings are of the long-term variety. But most are.

    Investors and institutions who own them on behalf of millions of retirees will suffer shocking declines in the market value of their portfolios.

    They could suffer a chain reaction of defaults, gutting their income stream.

    And worst of all, they now have some reason to fear the de facto default of the biggest debtor of all — the government of the United States of America.

    I doubt very much we will see THAT happen. But two events are very possible, even likely:

    * America will lose its triple-A rating. And if the Wall Street rating agencies don’t have the moral fiber to announce downgrades, the marketplace will do it for them.

    * Our leaders will face an Armageddon unlike any since the Civil War: Either muster the courage — and the support of the people — to accept the pain and make the sacrifices of a lifetime … or face the downfall of America.

    They will no doubt seek every other alternative and try every other trick. But alas, no printing press can run faster than our foreign creditors can sell their U.S. bonds. No one will bail out America.

    Ultimately, there is NO choice.

    We must bite the bullet. We must make the sacrifices. Like California and Greece … like every household and any company … our government MUST cut back and accept the rest of the consequences:

    #6. Declining home values.

    #7. Falling stocks.

    #8. The end of the recovery!

    And many, many more.

    My recommendation: Hold on tight. Don’t veer from your safety-first approach.

    Good luck and God bless!


  4. Some thing I have got from a nother artical.......................

    It’s worth bearing in mind that, as we watch the two big spectator events currently playing – the Winter Olympics in Vancouver and the Greek Tragedy – and think about the impact of the second one on our investment portfolios, that Greece’s problems began with the 2004 Olympics in Athens.

    The Games cost Greece €10 billion it could ill-afford. The cost of just operating the event blew out from a budget of €500 million to €1500 million. As a result, the Greek government ended up with a budget deficit in 2004 of 5.3% of GDP and the then socialist government was booted out five months before the Games began, in the general election of March 2004.

    By an ironic quirk of fate, the loser was the current prime minister, George Papandreou. He was defeated by the right-winger, Kostas Karamanlis, president of the New Democratic Party. Five years later, in the parliamentary elections of October 2009, Karamanlis was defeated by the same George Papandreou – son and grandson of two previous Greek PMs.

    When Kostas Karamanlis took over in 2004, he commissioned a financial audit, after which he announced that Greece’s fiscal position was far worse than previously thought. When George Papandreou took over from him last October, he announced the same thing. They were both right.

    The question that the bond markets and the other taxpayers of Europe are asking is: if the right-wing Karamanlis was unable to clean up Greece’s fiscal mess, why would anyone think the same Socialist Party that caused it in the first place would be able to fix it?

    ..................Hey do you recon the Uk will make money from the games?

  5. Good news guys, I just settled on my property in Melbourne today.

    I was sweating big time on this one, it looked like my non refundable 10% deposit was a bit shaky at one point. Bank was making me jump through hoops right up to the glorious end.

    Heading up there now, and furniture arrives tomorrow.

    Non refundable 10% how does that work? You put in a cash offer on the hope you may get finance!

    That must be bull dust no one is dumb enuff to put a full 10% when 5% would have done the same thing.

    Any way the vendor may not just let you walk away, they may well go after the sale if they thought you may have asetts, Not so smart Bardon.

  6. Money devalued by 99.4%

    Money devalued by 99.4%

    According to the Reserve Bank of Australia (RBA) numbers on Money Aggregates, the M3 money supply has increased from the equivalent of $6.7 billion in 1959 to $1.19 trillion by the end of 2009.

    In other words, the value of money over the last fifty years has fallen by 99.4%. To put it another way, the equivalent of a dollar held in 1959 is almost worthless if still held today.

    Now, I know it's not likely that you'll have kept the same currency unit in your pocket or your bank account for fifty years, but the point is, thanks to inflation your wealth is being eroded on a daily basis.

    Even if we look at a shorter time period, 1990 to 2009, you can see the M3 money supply has increased from $207 billion to $1.19 trillion:

    82.5% decline in 30 years

    82.5% decline in 30 years

    That's a depreciation of your dollar by 82.5%. And that's just within the last thirty years.

    The reason I bring this up is to try and settle an argument we've scoffed at but which the property spruikers are convinced is true. That is that property is a hedge against inflation.

    That if you buy a property today it will rise in line with the prices of everything else and therefore your debt will be paid off easier because of inflation and you'll be left with a higher priced house.

    Our argument has been, "Where's the proof that inflation and property prices are directly correlated?" And furthermore, we constantly warn anyone not to believe that inflation is your friend. By itself, inflation is always your enemy.

    So far, the spruikers haven't come up with anything to back their argument. So, our only course of action is to try and refute our own argument. We're happy to try, it keeps us on our toes.

    Below is a chart we knocked together using data from the Australian Bureau of Statistics (ABS) and the Reserve Bank of Australia (RBA). It compares the index values of '8 Capital City House Prices', the Consumer Price Index (CPI), and the M3 money supply:

    Are inflation and house prices correlated?

    Are inflation and house prices correlated?

    Now, before I go into too much detail, a quick note on the dates.

    You'll see it only runs from 1986 to 2005. Just to make it clear, we haven't cherry-picked that timeframe for any particular reason. The only reason we've done that is the ABS changed the index calculation for house prices in 2005 and we didn't want to mess around with trying to marry up the two sets of numbers.

    Anyway, the dates aren't as important as the comparison of the data sets over the same timeframe.

    As you'll note, using a logarithmic scale, the green and blue lines move almost in tandem.

    In index number terms, the 8 Capital City House Prices index has risen from 61.3 in June 1986 to 251.9 in June 2005. That's a 310.9% increase.

    Over the same period, the M3 money supply increased from $125 billion to $678.5 billion. An increase of 442.8% in the money supply, or a decrease of 81.5% in the value of your money.

    In percentage terms that's a pretty big gap, but on the chart, well, it's hard to see any difference. But, as we've pointed out before, you can't just put two different data sets on a chart and claim there is or isn't a correlation.

    But in this instance, whether there is a correlation or not is irrelevant. We don't need to prove or disprove it, we can simply look at the data and draw a simple conclusion. And that is, between 1986 and 2005 the M3 money supply increased by a greater amount than the value of the 8 Capital City House Prices index.

    Therefore, we can say that during that period, house prices did not provide a complete or perfect hedge against inflation.

    The divergence is more obvious if we use a linear scale:

    Inflation almost off the charts!

    Inflation almost off the charts!

    The interesting point to note is by how much the official CPI number understates the impact of the devaluation of your money.

    If you just take the 8 Capital City House Prices index and compare it to the CPI then you'd be left with the false impression that property is an inflation buster.

    Whereas the truth is that the CPI number masks the real story. And that is the value of the dollar has fallen to such an extent that even the so-called housing boom has failed to maintain the value of your dollars.

    In fact we can go even further than that and say that between 1986 and 2004, the real price of property would have dropped as the value of your dollar fell faster than the price of homes rose.

    Look, we're sure the property spruikers won't like that, and they'll set their Phasers from stun to kill, but those numbers speak for themselves.

    If you accept the fact that creating more money has a devaluing effect on the money already in circulation, then you must also accept that you need to take the real rate of inflation into account when valuing an asset after a specific time period.

    In this case the value of the 8 Capital City House Prices index has failed to keep pace with the increase in the money supply - M3.

    Of course, articles such as this one from Peter Boehm over at Yahoo! Finance prefer to use the CPI when he claims, "Combine this with a return to stable economic conditions and relatively low and stable interest rates and you have the necessary ingredients for home prices to increase well ahead of inflation."

    He's referring to the growth rates required to make the median house prices in Sydney, Melbourne and Brisbane $1 million by 2019:

    Median House Prices at $1 Million October 2019

    The trouble is, by 2019, if the increase in the money supply is anything like it's been over the last ten years, then the 117.8% increase for Brisbane will have been dwarfed by the 184% increase in the money supply:

    Inflation to outpace property growth

    Inflation to outpace property growth

    Simply put, the increase in property prices won't have kept pace with inflation.

    We've heard plenty about "Property Millionaires", yet the reality is that they don't exist in the way the spruikers would have you believe.

    What they should really be called are "Property Debt Millionaires." $1.1 million of assets and $1 million of liabilities. Waiting for the so-called 'equity' in the home to increase and then withdrawing more cash to take out more debt.

    Isn't there a saying about 'credit' being the only difference between the hobo on the street and the majority of home owners?

    So, when the spruikers talk about the median house price reaching $1 million in 2019, just remember a couple of things...

    First, a million dollars in 2019 won't be worth what a million dollars is today or ten years ago.

    And secondly, if you look at the chart below:

    Million dollar mortgages

    Million dollar mortgages

    If owner-occupied housing loans increase at the same rate as they have over the last ten years, then even though the median house price very well could be $1 million by 2019, odds are the median mortgage won't be far behind.

    The upshot is, by these numbers you can argue property prices have already fallen. But that's only the half of it. So far, the insidious effects of inflation have meant borrowers are suffering a silent 'debt-death'.

    The realisation and the pain will be more obvious when borrowers experience an actual fall in the price of housing in dollar terms. Contrary to mainstream belief about Australia missing the housing crash, the facts are it's likely to happen sooner than we all think.



  7. The key is in Healy's other comment:

    "I think that one of the little focused-on but absolutely critical questions for our industry and Australia's policymakers is the extent to which the Basel II capital rules create an economically unhealthy bias towards residential lending and distort capital allocation away from more entrepreneurial and productive sectors of the economy."

    Double Gadzooks! Looks like we need to drop Mr. Healy a line to see if he'd like to make some freelance contributions to Money Morning - for a fee of course.

    In other words, yet again, banking regulations that are spruiked as making banks safer are in fact doing the exact opposite. The Basel II rules are helping our dear friends at the Australian banks to pump, pump, pump that housing bubble.

    We always hear the argument that housing is productive. Because you can buy it today and sell it at a profit in a few years time. And therefore because it can be resold for a profit, housing is an investment, not a consumer item.

    Well, a more convincing argument is that housing is most definitely a consumer item. Because once you've bought a house you 'consume' it. The house that you re-sell in the future is not the same house that you bought. [Readers voice: What the heck are you talking about?]

    Simply put, let's say you build a house today. You have paid X dollars for a brand new house. However, if you were to sell the house in ten years you aren't selling a brand new house.

    The house you're selling in ten years is a ten year old house. It isn't the same as when you bought it. Therefore the house you buy today isn't the same item that you're selling in ten years.

    That's what makes it a consumer item and not an investment. Just like the new jumper you buy today isn't the same as when you sell the jumper on eBay in two years time. No one will pay you the same for it then as you paid for it today.

    That's because you've 'consumed' it. No one can claim jumpers are an investment.

    "Ah, but the land value appreciates," is the usual response. Maybe it does, maybe it doesn't. But that doesn't make housing any less of a consumer item. Furthermore, demolishing a house in order to build a new one is a further misallocation of resources.

    The idea that building things to destroy them and then build new things is somehow economic growth is bizarre.

    But that is what's happening in housing. The mindset is that house prices always rise. And that they rise so much you can get away with buying something, destroying it, and building something new and you'll make even more money.

    House prices have only risen in value due to the excessive issuing of credit by the banks. More and more resources and credit is flowing through to an industry that makes hugely expensive consumer items.

    While there is nothing inherently wrong with producing consumer items, the problem is that Australians don't realise they are buying a consumer item. Thanks to the spruikers they are under the false impression that they're buying an investment.

    Hence the housing price bubble. Like the young lad in the movie, we're waiting with our fingers in our ears. Any moment now...



  8. Yes right now things are not going as I had hoped but let me go on the record buying property in Australia right now is a sure way to poverty.

    So I wait the wrighting is on the wall.

    Bardon I hope that soon you will have to question just how you have found yourself in negitive equity.

    But then I forget, given your past performance you will bost how you sold up just in time.

  9. [/b]

    Everyone has been cooking the books, haven't they?

    The banks are going to have a field day at the expense of the population in Oz when the crash eventually comes(I think it will only arrive if/when China has trouble).

    They'll write down the losses and get bailed out by the taxpayer as per the UK, at the same time they'll mop up tons of distressed assets either by repossession or at firesale prices. A year or two later it'll be bonus time again.

    I doubt if the Aussies will have the gumption to string any of the bankers up, we haven't done so.

    Well what is happening all over the world right now banks and governments are doing all that they can not for close on over indebited people and business.

    A good example is that maths teacher with 500 houses, now he gets a super low interest rate.

    In australia if you loose your job you can have a year holiday from mortgage repayments.

    The cost is being worn by the tax payer and savers (low interest rates). Money printing inflation, Crazy how the prudent must now pay for the greedy and stupid.

    Clearly the queston of right or wrong has nothing to do there desision making, as a scab remarked to me "what have morels got to do with making money?"

    Again as all ways in history the strong have to carry the weak. If this situation drags on government will discover that once incentive is taken away so too does will to try.

    So stupidly I find myself in a position were I get 5.45% interest . it would cost me about 4% if I were to buy the house I rent, how ever the house prices and rent are just keeping on going up. So after I pay tax on my interest earnings Iam loosing. The government medaling I put my situation down to.

    The problems have bein created over 10 years of eazy money and will have a spectatular ending I hope.

  10. Europe's slow, painful death

    There is something comical about current talk about a potential Greek bankruptcy. No, the state of Greece’s public finances is certainly no laughing matter. But it is funny how politicians and financial markets are getting excited about this as if it were news.

    The truth is that for years, if not decades, everybody in Europe knew that you could not trust Greek economic statistics. That investment bank Goldman Sachs was complicit in fabricating favourable public borrowing figures for Athens has only added some colour to the scandal but it does not substantially change the big picture. Europe should have feared the Danaans even when they were bearing ‘A’ ratings.

    That Brussels pushed ahead with monetary union regardless of any doubts about some eurozone members only shows that economic considerations always played second fiddle. From the start, the Euro had been a project meant to curb Germany’s economic dominance in Europe while aiming to create a new reserve currency to rival the US dollar. It was born out of political ambitions, not out of economic necessity.

    Economists had long been worried about the construction of the euro. They had warned that the member states were far too different to have a common currency. They had pointed out that monetary unions had never worked without coordinated fiscal policy. They highlighted the lack of credible sanctions against member states that did not comply with the EU’s Growth and Stability Pact. They argued that Britain’s forced exit from the ERM mechanism in 1992 could foreshadow future speculative attacks against eurozone members.

    Yet none of these concerns could deter Europe’s political leaders from entering into this grandest of economic adventures. Doubts, concerns and warnings were simply brushed aside by the political class.

    As it turns out, European citizens were less convinced. In the only referenda on the euro so far, the Danes and the Swedes voted against it and there were good reasons never to put the question to, say, the Germans. Had you asked them whether they actually wanted to sacrifice their beloved Deutschmark for the euro the answer would have been a resounding ‘No’.

    Looking at it from this angle, the Euro is not only an economic disaster but also a political failure. It encapsulates everything that is wrong with Europe. While European leaders indulge in grand visions of socio-economic leadership, they have consistently failed to deal with the continent’s real economic challenges. And there are many.

    The current Greek crisis may turn out only to be a taste of future disasters for Europe. Even if the EU or, more likely, German taxpayers will manage to avoid an immediate Greek meltdown, it seems likely that in the medium term the problem will resurface, only then much worse.

    You do not have to be as bearish as Societe Generale global strategist Albert Edwards who calculates that on and off balance sheet net liabilities for the EU already exceed 400 per cent of GDP. Just looking at Europe’s worsening demographic situation should be enough to rob any European of his sleep.

    According to Eurostat, the EU’s statistical office, the average age of Europe’s population is currently 40.4 years. By 2030, this will go up to 45.4 years. A change of the average age of 5 years in 20 years’ time may not sound much, but it means enormous pressures for European welfare states. An older population does not only mean more pensioners but also rapidly increasing health costs. Given the already precarious state of public finances across Europe, it is quite clear that Europe will not be able to shoulder these burdens. The Greek crisis is just foreplay to the demographic catastrophe which will engulf all of Europe in the coming decades.

    There would be some reason to be less pessimistic about Europe’s future if at least European politicians had understood the magnitude of their challenge. Sadly, this is not the case. Even in the face of an acute budgetary crisis, parts of the Greek population fight any reforms tooth and nail. In Portugal, parliament granted extra funding to regional governments the very day that international investors were pushing insurance rates against a Portuguese default. France is an all seriousness debating whether it can keep its retirement age at 60 – never mind that by the middle of the century one in three Frenchmen will be older than that. In Britain, neither the Labour government nor the Tory opposition are prepared to put forward plans to reduce their budget deficit of 13 per cent. And in Germany, the head of the Liberal party and federal vice chancellor Guido Westerwelle just got into trouble for suggesting that people with a job should always earn more than people on welfare. He was dutifully condemned by politicians of all parties, including his own.

    In the European culture that shies away from necessary political and economic reforms, it will be impossible to come up with sensible recipes to stop, or at least slow down, Europe’s inevitable decline. Given this, the best Europe can hope for is a slow death. Let’s hope that it will be spared civil unrest or worse in the process.

  11. How finite are the resources concerned. How much iron-ore? 20, 30, 100 years worth?

    The high grade eazy stuff has gone all ready,But the if prices remain high than a 100 years no problem

    The natural gas reserves are pretty big I believe.

    Yes but in 100 years we will be burning malley stumps

    The country is enormous, I agree, the bubble could continue.

    The country is enormous and the forests were thought to be a endless amount of timber now it is all gone just a shodow of what was, and now we cut down the small stuff for wood chips for toilet paper.

    They're behaving like the UK with North Sea Oil - is it an Anglo-Saxon thing, this stupidity of selling the windfalls and spending the cash on crap instead of re-investiing?

    They could be developing a massive solar energy infrastructure and addressing the water issues with the cash. I suspect if Oz was run by Norwegians, that's what would be happening.

    Re-investing ? solar energy , why when coal is cheap and plentifull, why would you throw away a big advantage?

    We are gona solve our hopless shortage of fresh water by doubleing the population in 30 years , at first I thought this was chrass stupitity untill I realized that the government has a plan ! maybey some of the new Australians will figure out a way to make it rain more offten.

    Australia is a huge land mass how ever all except for a small fraction is just dry scrub that has no value

  12. HONG KONG (MarketWatch) -- Australia's seemingly bulletproof economy could soon face fallout from high debt levels and purportedly misguided policies designed to pump up asset prices, according to an outspoken skeptic of the nation's housing boom.

    Economist Steve Keen of the University of Western Sydney, who claims to have accurately foreseen the global financial crisis, said he's been dismayed by what he sees as a growing nationwide housing bubble stoked by government efforts to forestall economic pain.

    Keen points to a first-time homebuyer subsidy program, various other stimulus programs, and a 4-percentage-point reduction in interest rates -- policies introduced in the wake of the 2008 crash and which he termed "The Boost" -- as having helped fueled a new housing boom and a 6% rise in mortgage debt last year.

    "The Boost has ... given Australia a dubious distinction when compared to the rest of the OECD. Yes, we are the only country that avoided a technical recession; but we are also the only country where debt levels are rising once more compared to GDP, rather than falling," Keen wrote in comments posted on his Web site, keenwalk.com.au.

    He now believes Australian home prices could mimic Japan's decades-long slump, where prices have drifted 40% lower from their highs in the early 1990s.

    To raise awareness of what he says is the nation's dangerously inflated debt bubble, Keen launched the keenwalk Web site. It details the author's plans for an eight-day march from Canberra, planned for April, the result of a losing bet with a Macquarie analyst that Australian house prices would fall last year.

  13. Launch of www.keenwalk.com.au

    Steve Keen lost half of a famous bet with Macquarie Bank’s Rory Robertson when Australian house prices set a new record in September of last year. As a result, Steve is walking from Parliament House in Canberra to Mt Kosciousko—a distance of 224km. The walk will start on April 15th at 2pm. Steve plans to cover about 30km a day and finish in the afternoon of April 23rd.

    Steve is hardly cowed by having lost half of the bet. “The main bet, over whether house prices here would fall by about 40% over 10-15 years as they did in Japan, is still alive and well”, he noted. “Rory may yet have to follow in my footsteps.”

    He also commented that even critics of his outspoken views on the economy agree that the Rudd Government’s “First Home Owners Boost” was the main reason house prices were still rising a year after Robertson proposed the bet. “Even Terry McCrann, who’s hardly a fan of mine, agreed that my nickname for it—the First Home Vendors Boost—is apt (“Behaving stupidly on first home buyer grant”, Herald-Sun November 3rd 2009). All the Boost did was drive up prices, as first home buyers used the extra A$7,000 to borrow another $30-50,000 that they handed over to the sellers.”

    “Now, as Fujitsu Consulting has shown, almost half of those new owners are financially stressed. The money they borrowed stimulated the economy, but what will happen to them and the economy when they can’t afford to keep up the payments? They are potentially the sacrificial lambs of Australia’s so far successful evasion of the GFC.”

    “I’m happy to walk from Parliament House to Mt Kosciousko if I can draw attention to the absurdity of basing economic policy on making housing more unaffordable.”

  14. Apologies that the links and charts from Michael Shedlock's blog (pasted above) did not copy.

    They are worth a look. The chart on Australian mortgage stress is particularly rewarding. If anyone out there feels glum about renting while you wait for price to correct, that chart will surely cheer you up.

    Here's the link to Michael's blog:


    By the way, one thing Michael didn't comment on was the decrease in mortgage approvals in November and December. From memory, I think November was -6.1% and December was -5.5%. At the same time 2009 Q4 prices went sky high. Generally speaking, rising price on thinning volume is associated with a trend reversal. Not that you can guarantee these things, but it's a pretty bad sign for the market.

    If anyone out there feels glum about renting while you wait for price to correct, that chart will surely cheer you up.

    Mmmmmm yes that sure has made me feel a lot happer.

    I like to look into this subject page offen . However Bardon, his disrespect and his rantings spoil my enjoyment. the sooner property prices crash the better as it will mean bardon will no longer be hear braging and bosting. But then going on his past he will no dought tell every one how he got out "just in time"

    Yes the corner you have painted your self in to is gona get very small.

    Bardon your morning coffey will tast very bitter!

  15. More jobs available but fewer hours being worked

    * David Uren, Economics correspondent

    * From: The Australian

    * February 12, 2010 12:00

    THE jobless rate appears to be heading back below 5 per cent. However, Treasury believes the economy has spare capacity and does not expect the booming jobs market to lead to skills shortages or a wages breakout.

    Unemployment dropped from 5.5 per cent to 5.3 per cent last month as business took on an extra 52,700 workers, extending the best run of employment growth in five years.

    Since last September there have been almost 200,000 new jobs created.

    However, testifying before the Senate economics committee yesterday, Treasury secretary Ken Henry drew attention to a fall in the average number of hours being worked, with more people working part-time.

    "We think there is substantial spare capacity at this point," Dr Henry said, adding that the fall in hours was equivalent to a full-time unemployment rate closer to 7.3 per cent.

    "We would not think that there is a lot of crowding out of private sector activity at the moment

    Dr Henry said he did not expect the economy to confront capacity constraints until the jobless rate was up to a percentage point lower than it is now.

    Employment Minister Julia Gillard said the number of unemployed was still 120,000 higher than it was in September 2008, when the global financial crisis started.

    "We still need to support the Australian economy through economic stimulus," she said.

    However, she agreed that labour shortages were evident in some areas, with the resources industry driving strong growth in the northwest of Australia and in Queensland.

    She said the government was relying on the enterprise bargaining system to guard against wage breakouts.

    "Once an agreement is struck, an agreement must be honoured and adhered to," she said, adding the "full force of the law" would be imposed on any breaches.

    Opposition Treasury spokesman Joe Hockey said the strength of employment meant the economy no longer needed the help of government stimulus spending which would, instead, result in higher interest rates.

    "I warned that the big issue going forward would not be unemployment for Australians, it would be higher interest rates and again I've been proven absolutely correct," he said.

    Although many financial market economists agree that the overall strength of employment will push the Reserve Bank to lift interest rates by 25 basis points to 4 per cent at its March meeting, it may also be influenced by the fall in hours being worked.

    Deutsche Bank chief economist Tony Meer noted that the average number of hours worked has fallen to 31.9 hours a week.

  16. Blue skies, you wouldn't have the faintest idea about my financial position not that you draw on a basis of knowledge when you post anyhow.

    Your post is just so void of substance and full of negativity I think you are looking in the mirror.

    I dont see your name mentioned in my post?

    but if the cap fits wear it

    As for your finantual position I think it is overstated.

    Funny how a man with a high profile has so much time on his hands?

    you never tell us how you manage to do it

  17. Cause and effect.

    Your personal finances are looking down, so you borrow money and just like that your problems go away.


    But what about 6 months time when you have to tighten up on spending?


    You all so have to work over time to pay the loans back.

    Your life style in going down the toilet.

    Hmmmmmmmmmm Sound like anyone we know? the government ?

  18. Sorcha Faal has her countries mixed up there are so many more worthy countries heading for finantual disaster.

    Her own Ireland for a example.I recon that her artical is not to be belived.

    But I think the hammer will go down in Australia but only after a country defaults or a currency crises.

    News paper reports if they are to be belived stated that the bankers meeting in Perth Australia had being arranged a long time ago.

  19. Australian houses 'world's least affordable'

    27/01/2010 10:00:00 AM

    Australia has the least affordable houses in the world according to a ranking of international housing markets.

    By Stuart Fagg, ninemsn Money

    Australia has the least affordable houses in the world, according to a ranking of international housing markets.

    From a total of 23 Australian regions included in Demographia's Sixth International Housing Affordability Survey, 22 were labelled severely unaffordable and Australia scored the worst housing affordability rating in the world, followed by Canada.

    Demographia calculated the ratings by diving median house prices by annual median household income and named Vancouver as the least affordable market in the world.

    Sydney was ranked second, with the Sunshine Coast, Darwin and the Gold Coast rounding out the top five.

    Melbourne and Wollongong also made the top ten, coming in at eigth and tenth respectively.

    In Sydney, nearly 57 percent of the average income is needed to pay the mortgage on the average house, compared to just 13.4 percent in Dallas, Texas, one of the most affordable major city housing markets in the world.

    The average dwelling price in Sydney rose 11.6 percent last year to $475,000, just above the national average of $439,000, according to RP Data.

    Experts said housing affordability is being eroded by a lack of supply.

    "Residential land release in Sydney has been reduced from an historic average of 10,000 lots per year to less than 2,000 in 2007," said Dr Tony Recsei in the preface to Demographia’s report.

    "In the face of the scarcity resulting from such a miserly allotment it is unsurprising that the land component of the price of a dwelling has increased from 30 percent to 70 percent. The result has been a cost increase of some three times what it was a mere ten years ago."

    Demograophia added that land release and planning issues are making the situation worse.

    "In Australia, there is consensus in both the government and the private sector that there is a severe housing crisis, with rampant unaffordability and a housing shortage," the report said.

    "It takes from 6.25 to 14.5 years to convert urban fringe land into new houses, which compares to less than 1.5 years before urban consolidation, and which remains the case in the 'demand-driven' (more responsive) markets in the United States."

    Demographia urged governments to free up land use rules in order to ease affordability problems without causing a housing market crash.

    "The restoration of near historic housing affordability in some markets provides an opportunity to repeal more prescriptive land regulation policies, which would not only minimise the potential for future busts, but would also ensure housing affordability for future generations," the report said.

  20. Hats off to Barnaby Joyce for having a crack. Maybe when his political career is finished, and he's yesterday's nobody, we could offer him a job writing newsletters. He certainly knows how to write a good headline!

    If you missed it, in an interview with the ABC Barnaby Joyce said:

    "We're going into hock to our eyeballs to people overseas. And you've got to ask the question how far in debt do you want to go? We are getting to a point where we can't repay it."

    ABC reporter, Stephen Long's response? Well, here it is:

    "The polite way to describe that comment - nonsense. It's not true, plain and simple. The credit ratings agencies don't always get it right; the global financial crisis showed that. But they've got a lot of experience in rating sovereign debt."

    And then the little reporters scurry off to interview the usual suspects: Standard & Poor's, Fitch Ratings, and Citigroup.

    Hmmm, the ABC relies on two ratings agencies that rated subprime mortgage debt as triple-A, and an economist from a bank that was partially nationalised by the US government.

    Not surprisingly they give the Australian government coffers the stamp of approval.

    You can click here to read the transcript, but the gist of it is blah, blah, blah... Australia did better than everyone else, etc...

    According to Citigroup economist Josh Williamson, asked whether Joyce's comments were irresponsible he answered, "Absolutely."

    So, is Joyce's comment nonsense? Well, it is in the sense that governments have one advantage that no one else has. And that is the ability to print extra money to pay off debts.

    As we've mentioned before, if you crank up the Canon inkjet printer and run off a few thousand $50 notes, you'll find yourself in the Slammer before you know it.

    The fact is, most governments are too sneaky and dishonest to openly default on debt. Their first response is always to inflate the money supply to devalue the currency. That way, while the debt is repaid it's done with a devalued currency.

    But that's the disappointing part about the mainstream media's response to Joyce's claims. It doesn't take much effort to look beyond his statement to see there's at least an ounce of truth in what he's saying - not that he's the first to say it of course.

    And the other disappointing point is Josh Williamson's comment that "We have an excellent debt to GDP position." Because that's only true of the government debt.

    The household debt to GDP position, and income to household debt position is nowhere near as good. In fact it's terrible.

    And worse is that unlike government's, households can't simply print out extra $20 notes to pay off their debt. So the real problem isn't the possibility of the government defaulting on debt, it's the scale of the household debt default when that happens.

    Of course, we frequently hear the argument that inflation is the friend of debtors. That over time the amount of debt reduces when adjusted for inflation.

    We have to say, that's one of the biggest furphies going around. Along with the idea that a house is a hedge against inflation.

    As we've written before, in all cases inflation is bad for you and your wealth. Inflation is never good. At the extreme, ask Weimar Republic Germans, or Zimbabweans, or even look at your own position.

    Has inflation really helped you out over the last twenty years? Didn't think so.

    The simple reason is that inflation forces you to work harder.

    Let's be honest. No one wants to work. We work because we have to. But imagine how much better it would be if there was no inflation. Or if there were periods of deflation to counteract the inflation.

    Inflation devalues the dollar in your pocket which means you have to keep working harder and longer. Your ability to devote more time to leisure lessens the more inflation eats away at your income and your savings.

    I mean, if your dollars weren't devalued and prices didn't rise then your savings would really grow, and without much effort either. Whereas now, as an investor you have to run just to stand still.

    Look at the risks you need to take as an investor. Even a 10% or 12% annual return from taking big risks on the share market probably isn't enough to beat inflation. And I mean the real cost of living increases not the phony numbers the Australian Bureau of Statistics (ABS) come up with.

    And as for the idea that a house is a hedge against inflation, well, that's more twaddle. It's no such thing. In fact, in an inflationary environment houses become nothing more than a 'White Elephant.'

    If you want to know the origin of that phrase, just head over to the Lazy Researcher's Handbook.

    You see, inflation appears to help by showing a correlation with rising house values. Yet there's no evidence that there's a causal relationship.

    Just on that point, we've seen plenty of people say, "Look at the chart, inflation has gone up over the last thirty years, so have house prices, therefore housing is a hedge against inflation."

    Not so fast. You can't take two data sets, compare then and then just announce a correlation.

    If it was that easy then you could compare house prices to a chart of your editor's age over the last thirty years. You could conclude because both have risen that your editor is a hedge against inflation!

    What utter nonsense.

    Inflation inflicts greater harm on the homeowner due to higher maintenance costs.

    Fuel bills go up, electricity bills go up, replacing furniture, fixtures and fittings all go up. And generally just keeping the home in good nick incurs higher and higher costs. The cost of moving goes up, the cost of downsizing to a smaller home goes up, and so on.

    You only have to look the popularity of reverse mortgages. Old timers borrowing money in their old age because they've spent so much on maintaining their home for the last thirty-odd years. And because high taxes have robbed them of the chance to save, they've got no other choice than to put themselves into hock just to cover the weekly shopping.

    Or another example. The relish with which a twenty or thirty year old home is advertised as a "renovate or detonate" property. How is that either an investment, or a hedge against inflation?

    It isn't.

    That's house price inflation for you.

    Then at the extreme look at the number of Victorian stately homes in the UK that are falling apart. Lords of the manor having to rent out their 500 year-old ancestral home to bucks parties and corporate dinners because they can't afford to repair the leaky roof.

    Or if they're really strapped for cash they have to flog it to National Trust and then live out their days in the Gatehouse because they can't afford the heating bills or maintenance costs.

    And they can't sell them to private owners, because no one else is foolish enough to lumber themselves with such a White Elephant.

    As I say, that's the extreme, but the reality is, housing isn't a hedge against inflation.

    In fact if you compare it to something else which is claimed to be a hedge against inflation - Gold - they have nothing in common.

    Gold is divisible, a house isn't - you can't sell it brick by brick and get the same proportional return.

    Gold is transportable, a house isn't - unless it's some crappy weatherboard home no one wants and you're prepared to pay for transport costs. Or, unless your home is a caravan! But then of course, according to Saul Eslake and his crew at the National Housing Supply Council, if you live in a caravan you're homeless anyway, so that doesn't count.

    Gold is durable, a house isn't - see the examples above.

    Gold can be hidden from the government if they try to confiscate it like the US government did in the 1930s. Try hiding a house! Good luck with that one.

    Plenty of people will tell you Gold isn't a hedge against inflation anyway, that it's a hedge against political instability. We're prepared to consider that argument. But we'll also say that if Gold isn't a hedge against inflation, then housing most certainly isn't either.

    The fact is, while Barnaby Joyce may not be 100% correct, he isn't 100% incorrect either. Record high household debt levels have indebted the Australian population.

    So even though the odds of the Australian government 'honestly' defaulting on its debt obligations are near to zero, the odds of Australian households being forced to default under the pressure of the White Elephant of housing is better than evens.



  21. Housing finance fell 5.5pc in December

    * From: AAP

    * February 10, 2010 11:36

    HOME loan approvals retreated for a third straight month in December after a reduction in government subsidies and interest rate rises dampened enthusiasm for mortages, economists say.

    Australian housing finance commitments for owner-occupied housing fell 5.5 per cent in December, seasonally adjusted, to 55,632 the Australian Bureau of Statistics (ABS) said.

    That was weaker than economists' expectation for a fall of five per cent in the month.

    Total housing finance by value fell by 2.8 per cent in December, seasonally adjusted, to $21.900 billion.

    NAB senior economist David de Garis said the pullback in approvals for housing loans was expected after federal government stimulus measures were wound back and increases to interest rates during the final quarter of 2009.

    The Federal Government reduced the first home buyers grant boost from $21,00 to $14,000 on October 1 and lowered it to $7,000 on January 1 this year.

    The Reserve Bank raised the overnight cash rate by 25 basis points to 3.75 per cent on December 1, following similar moves in October and November.

    Subquently, the central bank left the cash rate unchanged on February 2.

    "It is probably largely due to the departure of the first home buyers, who did all their borrowing and buying in the past months,'' Mr de Garis said.

    "When you look at the high levels we had a quarter or so back, we are getting some payback from that due to the stimulus measures.''

    Loan approvals for the building of dwellings fell for the second consecutive month, down 6.4 per cent in December, the ABS said.

    Demand for mortgages to buy new houses bucked the negative trend, up 3.0 per cent in the month, while loans for investment housing rose 1.9 per cent.

    "Investment housing is up, that is suggesting the sector is picking up a little bit of momentum,'' Mr de Garis said.

  22. Will Goldman Collapse the Greek Debt House-of-Cards?


    Contributed by Concerned Citizen on Tuesday, 9 February 2010 3:57:34 PM

    More stories from this contributor

    6 people have read this story

    From ZeroHedge...

    David Fiderer's below piece, originally published on the Huffington Post, continues probing the topic of Goldman and AIG. For all intents and purposes the debate has been pretty much exhausted and if there was a functioning legal system, Goldman would have been forced long ago to pay back the cash it received from ML-3 (which in itself should have been long unwound now that plans to liquidate AIG have been scrapped) and to have the original arrangement reestablished (including the profitless unwind of AIG CDS the firm made improper billions on, by trading on non-public, pre-March 2009, information), and now that AIG is solvent courtesy of the government, so too its counterparties can continue experiencing some, albeit marginal, risk, instead of enjoying the possession of cold hard cash. Oh, and Tim Geithner would be facing civil and criminal charges.

    Yet as we look forward, we ask, who now determines the variation margin on Greek CDS (and Portugal, and Dubai, and Spain, and, pretty soon, Japan and the US), the associated recovery rate, and how much collateral should be posted by sellers of Greek protection? If Greek banks, as the rumors goes, indeed sold Greek protection, and, as the rumor also goes, Goldman was the bulk buyer, either in prop or flow capacity, it is precisely Goldman, just like in the AIG case, that can now dictate what the collateral margin that Greek counterparties, and by extension the very nation of Greece, have to post on billions of dollars of Greek insurance. Let's say Goldman thinks Greece's debt recovery is 75 cents and the CDS should be trading at 700 bps, instead of the "prevailing" consensus of a 90 recovery and 450 spread, then it will very likely get its way when demanding extra capital to cover potential shortfalls, since Goldman itself has been instrumental in covering up Greece's catastrophic financial state and continues to be a critical factor in any futurerefinancing efforts on behalf of Greece. Obviously this incremental margin, which only Goldman will ever see, even if the CDS was purchased on a flow basis, will never be downstreamed on behalf of its clients, and instead will be used to [buy futures|buy steepeners|prepay 2011 bonuses|buy more treasuries for the BONY $60 billion Treasury rainy day fund].

    In essence, through its conflict of interest, its unshakable negotiating position, and its facility to determine collateral requirements and variation margin, Goldman can expand its previous position of strength from dictating merely AIG and Federal Reserve decision making, to one which determines sovereign policy! This is unmitigated lunacy and a recipe for financial collapse at the global level.

    This is yet another AIG in the making, with Goldman this time likely threatening to accelerate the collapse not merely of the US financial system, but of the global one, in order to attain virtually infinite negotiating leverage. Of course, the world will not allow a Greece-initiated domino, allowing Goldman to call everyone's bluff once again.

    As the amount of gross and net sovereign CDS notional is constantly increasing, as more and more hedge funds join the shorting fray with Goldman as the intermediate (just like in AIG), it behooves any remaining regulators and any sensible Federal Reserve parties to supervise precisely what the terms of Goldman's collateral margins with various sovereign debt sellers are, especially when it pertains to increasingly distressed CDS, where a liquidity squeeze, again as in the AIG case, would have tremendous adverse downstream consequences. If indeed Goldman's counterparties are the banks of respective countries, then the parallels with AIG are nearly complete. And we all know what happened then.

  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.