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blue skies

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Posts posted by blue skies

  1. STOCKS NEWS EUROPE-Swiss Re falls on Greece worries

    Mon Feb 8, 2010 7:29am EST

    Stocks

    Schweizerische Rueckversicherungs-Gesellschaft AG

    RUKN.VX

    CHF42.79

    -1.79-4.02%

    8:43pm GMT+0800

    Swiss Re (RUKN.VX) shares fall nearly 5 percent, with traders citing concerns about possible exposure to debt of Greece and other indebted euro zone countries.

    "People are worried that Swiss Re may have big positions in bonds of the troubled euro countries on its books," one trader says.

    A Swiss Re spokeswoman says the reinsurer held 110 million Swiss francs ($102 million) worth of Greek bonds at the end of the third quarter, 6 million of Spanish, 58 million Portuguese and 190 million in Italian bonds.

    Of Swiss Re's total 167 billion francs assets under management, some 33 percent are in state bonds. Reuters Messaging rm://[email protected] ($1=1.074 Swiss Franc)

  2. STOCKS NEWS EUROPE-Swiss Re falls on Greece worries

    Mon Feb 8, 2010 7:29am EST

    Stocks

    Schweizerische Rueckversicherungs-Gesellschaft AG

    RUKN.VX

    CHF42.79

    -1.79-4.02%

    8:43pm GMT+0800

    Swiss Re (RUKN.VX) shares fall nearly 5 percent, with traders citing concerns about possible exposure to debt of Greece and other indebted euro zone countries.

    "People are worried that Swiss Re may have big positions in bonds of the troubled euro countries on its books," one trader says.

    A Swiss Re spokeswoman says the reinsurer held 110 million Swiss francs ($102 million) worth of Greek bonds at the end of the third quarter, 6 million of Spanish, 58 million Portuguese and 190 million in Italian bonds.

    Of Swiss Re's total 167 billion francs assets under management, some 33 percent are in state bonds. Reuters Messaging rm://[email protected] ($1=1.074 Swiss Franc)

  3. The Greatest Money War of All Time

    by Martin D. Weiss, Ph.D. 02-08-10

    Martin D. Weiss, Ph.D.

    We are caught in the grips of a great war!

    It is not a traditional land or sea war with tanks and battleships.

    Nor is it an anti-terrorist, guerilla war for hearts and minds.

    Rather, it is war of a third kind — pitting government bureaucrats against millions of investors … and causing massive collateral damage to innocent Americans.

    Battle by battle, this great war has been escalated — each time with bigger guns deployed by Washington, each time with deadlier attacks striking Wall Street or Main Street …

    Battle #1 began in Thailand in 1997 when global investors suddenly ran from its currency, dumped its stocks and abandoned its real estate.

    Within weeks, the contagion spread to neighboring countries; within months, the fallout forced Russia to default on its sovereign debts.

    Long Term Capital Management, a major player in the high-risk derivatives market, went under. Wall Street was on the verge of an unprecedented meltdown. The Dow plunged.

    But the U.S. Federal Reserve responded swiftly, opening the money spigots full throttle and temporarily putting out the fires.

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    Soon, the pundits came out of hiding. They said the crisis was over. They swore up and down that the Fed had won the war.

    However, any appearance of victory was deceptive in the extreme. All the Fed had really accomplished was to win a single battle, postpone the inevitable collapse, and in the process, help create another, far larger problem: the Tech Bubble of 1998-1999.

    Investors, flush with cheap cash, rushed headlong into worthless IPOs. Harebrained business models prevailed. The Nasdaq DOUBLED in just one year.

    Battle #2 began when the Tech Bubble turned into the Tech Wreck of 2000-2002.

    Investors dumped their grossly overvalued dot-com stocks. Within weeks, the contagion of selling spread to other technology companies; within months, it spilled over into the entire economy.

    Tech Wreck Losses: $6.5 Trillion

    According to the above data compiled by the Fed, before it was over, U.S. households had suffered …

    * Losses of $3.6 trillion in stocks

    * Losses of $997 billion losses in mutual funds, plus

    * Losses of $1.9 trillion in life insurance and pension fund reserves

    Total Tech Wreck losses: $6.6 trillion. (For the proof, click here.)

    This time, the Fed responded with even bigger guns: To avert an all-out deflation, Chairman Alan Greenspan not only dropped interest rates to their lowest level since World War II, but he kept them at those extraordinary low levels for the longest period since the Great Depression.

    He pumped cheap money into the economy like never before. He virtually banished the fear of risk. And, as a direct result, tens of trillions in borrowed dollars rushed into the U.S. housing market.

    Again, the pundits swore the worst of the crisis had passed. Again, the government claimed it had scored a victory. Again, they were dead wrong.

    Battle #3 was the monster born from the ashes of Battle #2:

    The Fed’s response to the Tech Wreck created the Housing Bubble, which, in turn, spawned the Housing Bust.

    And alas, the losses resulting from the Housing Bust of 2007-2009 were 2.4 times greater than the losses from the Tech Wreck of 2000-2002.

    Housing Bust Losses: $15.5 Trillion

    According to recently released Fed data, even excluding the early real estate losses of 2007, the Housing Bust caused U.S. households …

    * Losses of $6.0 trillion in real estate

    * Losses of $4.4 trillion in stocks

    * Losses of $1.5 trillion in mutual funds, and

    * Losses of $3.6 trillion in life insurance and pension fund reserves

    Total Housing Bust losses: $15.5 trillion. (For the proof, click here.)

    Combined losses suffered during the Tech Wreck and the Housing Bust: $22.1 trillion.

    Yet now, under a new administration, the bailout brigades are up to their old tricks.

    For a third time, they’ve retaliated with easy-money fire hoses, this time driving short-term interest rates to practically ZERO.

    For a third time, they’ve deployed bigger guns. This time, with bailouts and stimulus that add up to 30 percent of GDP — TEN times more than the average of all prior postwar recessions.

    And again, they’ve had the audacity to declare “victory” … to say that the “crisis is over” … and proclaim that the “recovery is sustainable.”

    Inevitable result: Another gigantic bubble, another bust, and another round of devastating losses — this time in sovereign government debt (e.g., Treasury bonds).

    This is why the collapses of sovereign debt markets in Greece, Spain, and Portugal are so alarming. (See “The Next Contagion.”)

    And this is why the Obama budget — including an astonishing $1.6 trillion deficit in the current fiscal year — is so dangerous.

    My recommendations are unchanged:

    Avoid all long-term bonds, whether issued by federal governments, private corporations, or municipalities.

    Approach all stock investments with great CAUTION — tight stop losses, plenty of cash, and solid hedges.

    Above all, do not fall for this new deception. Keep your money safe. Make sure you’re not engulfed in the next round of collateral damage.

    Good luck and God bless!

    Martin

  4. You tell so many fibs Bardon I think you belive your own bull dust.

    The corner you have painted yourself in is gona get a whole lot smaller.

    You spend so much time on this site , just how do you do that?

    My gess is that you have nothing better to do than brag and boast, belittle people who are in all probability your betters.

    Any how by all means get your self as much debit as the banks will allow you.

    As the future unfolds You can will be able to say: Geee I was so clever to get all those houses or Boy was I so greedy now look I have negitve equity.

    Even you you are in trouble no doubt you will still be here to tell every one how you sold out just in time and put your money into what ever is doing well.

  5. View PostBardon, on 06 February 2010 - 09:52 PM, said:

    If you would care to read my predictions on this thread you would realise the erroneous claims in your statement. But you won’t as you are a one eyed worldly bear that is wise to the ways of the world.

    I like it when a big noting know all koala bear like your good self comes along. All global bluff and bluster then you just fade away like they all do.

    Seem them come and seen them go.

    also I haven’t made a purchase in Melbourne.

    So posting an article on ozzie biggest export deal is me ramping the commodities market now is it.......................psstt wannae buy some black coal ?

    The Maoris would call your claims wawau.

    View PostBardon, on 23 December 2009 - 09:22 PM, said:

    Just completed my house hunting down here in Melbourne and went unconditional on a house today. It’s a very hot market down here, especially in the bayside area, limited stock and most houses are selling very quickly. I have been very surprised just how strong the market is down here, seeing is believing.

    All the houses at auction are selling way above the reserve price. One just around the corner from where I bought in Hampton sold for 240k above the reserve at $1.44m and it was only a townhouse.

    None of the agents are taking any conditional offers, they wont take subject to finance and the one I used managed to even get me to waive my cooling off period. I never thought that I would be forced into that situation but never say never. It’s always a bit harder when you have to buy from the limited stock that is available. I really don’t see things cooling off in the new year in fact I think there will be another step up in prices. Now at least I can relax and have a bit of a holiday with the family. Its pretty tough on the kids dragging them around houses so the next week will be all about them having a holiday.

    The Australians would call your claims Bull dust

    Actualy I was wrong You sir are a Liar

  6. If you would care to read my predictions on this thread you would realise the erroneous claims in your statement. But you won’t as you are a one eyed worldly bear that is wise to the ways of the world.

    I like it when a big noting know all koala bear like your good self comes along. All global bluff and bluster then you just fade away like they all do.

    Seem them come and seen them go.

    also I haven’t made a purchase in Melbourne.

    So posting an article on ozzie biggest export deal is me ramping the commodities market now is it.......................psstt wannae buy some black coal ?

    The Maoris would call your claims wawau.

    View PostBardon, on 23 December 2009 - 09:22 PM, said:

    Just completed my house hunting down here in Melbourne and went unconditional on a house today. It’s a very hot market down here, especially in the bayside area, limited stock and most houses are selling very quickly. I have been very surprised just how strong the market is down here, seeing is believing.

    All the houses at auction are selling way above the reserve price. One just around the corner from where I bought in Hampton sold for 240k above the reserve at $1.44m and it was only a townhouse.

    None of the agents are taking any conditional offers, they wont take subject to finance and the one I used managed to even get me to waive my cooling off period. I never thought that I would be forced into that situation but never say never. It’s always a bit harder when you have to buy from the limited stock that is available. I really don’t see things cooling off in the new year in fact I think there will be another step up in prices. Now at least I can relax and have a bit of a holiday with the family. Its pretty tough on the kids dragging them around houses so the next week will be all about them having a holiday.

    The Australians would call your claims Bull dust

  7. Yes it is amazing and so does the rent. That coupled with your debt level and repayments being eroded by inflation is truly the eighth wonder of the world.

    Yes

    You actaully didn't answer the question. The question was that for your prediction of house prices to drop by 10% by years end, there will need to be a nominal point in time before that when the trend changes from +ve to -ve, when is this point in time ? I have given you a answer, your question is unreasonable, but given you thinking ability you can not understand that.

    Also if you look at my predictions you will see that I have been very specific and quoted actual % for each of my named postcodes and so far it looks like I am right on the money. I guess the earth could stop rotating and fall of its axis before the years out though.

    Your posts are so numerous I would hve to spend days trying to find your predictions , simple post then now.

    you ask others the same questions over and over to frustrate so I will try your tackic

    Mate I am only talking about making a motza on gaffs, dont know what your old boys toes have to do with that.

  8. As I have said before we are in the recovery phase of a five year upward phase and this could stretch further but that is tea leave stuff.

    Wage inflation is kicking down the door now.

    Nominal prices normally don’t drop in our cycle they just faltline, the drop last year was the worst dip in prices since the second world war. It truly was a bad time a white knuckle ride for us owners and my children will have the great ozzie price crash etched in their heads for live now.

    Ha ha ha your arguments have no substance.

    You ask of me what you will not give.

    Wage inflation! look job advertising in dropping.

    Looking to cycles is like driving down the road looking at the rear vision mirrow.

    The drop in prices last year : you must be joking

  9. Blue Skies what is your best guess as to when house prices will stop rising and start falling in order to meet the 10% drop that you have predicted by years end?

    I take it that you don’t think it will be an overnight phenomenon?

    Ok Bardon , Iam amazed that house prices are in fact going up.

    The credit bubble that first started in shares but was so big it spread in to realestate and than in to comdities.

    Poped in finantual sector and the debit became the publics debit.

    the debit wil still have to payed for by higher tax and lower government spending.

    the stimulus is all ready starting to run out of puff

    It may be some overnight sensation like Greece runing out of money.

    It may be death by a thousand cuts

    My money is betting on the down side for property prices.

    Here are some things too watch CLOSELY : Government bonds (interest rates)

    Unempoyment

    Bankruptcy

    Deflation

    Currency crisis

    Have you ever spent one year near the North Atlantic ? The difference in the seasons is astounding very unlike Australia.

    Summer Days that lasty for ever, Bittter winter.

    Yes finance turns not unlike the seasons.

    So Bardon there is my best gess right or wrong. I have the gutts to go on record, and you?

    People are so indedted they are no more than surfs from fedal times

    When i think about it how does it differ having a master or a employer? you are a servant no more than that

    Governments control of the population and media is reminisant of war time Germany

    I remember my fathers generation his deformed toes from wearing shoes too small for his growing feet, they understood what it is to be hungery. There attitude to debit was forged out of hardship. he and others like him had courage in times of trouble and valued independance above all else.

  10. Scores of financial and political media pundits are fond of fanning alarmist popular fears of an immanent default by the US. Many of the folks that preach this doomsday view are promoters of speculation in gold and various currency schemes that bet against the US dollar.

    Well, just how “unsafe” is the US, and US sovereign bonds in particular? The most direct measure can be found in the credit default spread (CDS) market. This represents the price set in the marketplace for the cost of insuring against a default.

    Below is a current list of the cost of sovereign default insurance premiums.

    By this reckoning, the risk of a sovereign default by the US is amongst the lowest in the world. The risk of default by the US is considered to be substantially lower than all European countries with the exception of Germany. The risk of US default is deemed substantially lower than Japan or South Korea. The risk of US sovereign default is deemed substantially lower than any of the BRICS, including current darling China.

    And just in case you're wondering, the risk of sovereign default in Argentina and Venezuela is deemed to be about 20 times as great as that of the US.

    Note, I make no claims regarding the absolute accuracy of CDS markets. They've been notably volatile, a fact that undermines any pretense of long-term accuracy. However, CDS markets can give us useful information about two things. First, this market tells us the price that insurers are charging to protect against the risk of sovereign default. If you think you're smarter than the economic specialists that make this market, you clearly have a very high opinion of yourself, and if you're right, you should very quickly become a millionaire many times over. Second, this indicator is particularly useful if you want to assess the relative risk of sovereign default. Insurers often underestimate “black swan”-type systemic risks, as such risks are very difficult, if not impossible to calibrate. However, insurers more rarely miscalculate relative risks as these can be assessed based on fairly measurable and predictable parameters (debt/gdp, debt service/gdp, financial system leverage, etc.).

    In response to the evidence from CDS markets, some bearish readers may protest that their doomsday scenarios not only contemplate the possibility of default. Their mantra is “default or inflate.”

    Well, that rationalization soon collapses upon even cursory examination. Global insurance markets are ascribing an extremely low probability of any sort of significant inflation in the US, looking at any time frame. Go check out the long-term inflation rate embedded in TIPS. Take a look at the markets for inflation/sensitive interest rate and currency instruments. None of these markets are signaling any sort of significant inflation in the short, medium, or long term.

    What about the rise in gold? First, that's an extremely tiny sandbox where a very peculiar subset of speculators dominate the field of play. Second, perhaps in part due to the reason just cited, gold markets

    have a very bad track record in terms of predicting anything, including inflation. Finally, the total cost of producing gold is somewhere in the neighborhood of $800. Currently at about $1,050, gold prices are in no way signaling any sort of major long-term inflation, else prices would be much higher. Thus, even if one were inclined to believe in the “predictive” properties of gold, the yellow metal currently doesn't seem to be predicting any sort of significant inflation.

    Doomsday default or inflation for the US? Apparently, a great many people have a great deal of fun speculating about it at the water cooler. However, clearly, the world has a lot more important things to worry about.

  11. Forbes. The Economist. Davos-World Economic Forum. Bloomberg BusinessWeek. All one voice, one loud, lonely chorus echoing that famous Beatles tune: "Head in a cloud ... The fool on the hill, sees the sun going down ... a thousand voices talking perfectly loud. But nobody ever hears him, or the sound he appears to make ... And the eyes in his head, see the world spinning 'round ...ooh, round and round and round."

    Historians and behavioral economists tell us most investors are blind optimists. Investors cannot see bubbles from inside their bubble. Nor Fat Cat Bankers from inside their mega-bonus-bubble. Nor politicians from inside the beltway bubble.

    Why? The optimist's brain filters out bad news. They know their dreams of prosperity will come true. Then, when they finally do see that the proverbial light at the end of the tunnel is an oncoming train, it's always too late.

    I will say it again, gently: A new meltdown is coming. The Great Depression II is coming, soon. And yet, I know your mental filters are working, blocking warnings of a bomb. I can even hear you calling me "the fool on the hill who sees the sun going down, the world spinning round" ... sees you kissing your retirement goodbye.

    who is this artical talking about? the bulls or the bears.

    In my experiance those who call others stupid are themselfs the greater fool. But then the fool does has the advantage as he never considers the possibility of being wrong.

  12. German Bonds Rise for Second Day as Stocks, Greek Debt Slide

    February 05, 2010, 07:25 AM EST

    By Matthew Brown

    Feb. 5 (Bloomberg) -- German government bonds rose, pushing the yield on the two-year note down to a record, amid concern some European nations will struggle to narrow their budget deficits and as data showed the recovery is yet to take hold.

    The 10-year note yield fell to the lowest in almost two months as a report showed German industrial production growth unexpectedly contracted in December and as every major stock market in Europe opened lower. The Spanish economy stayed in recession for a seventh quarter. Greek bonds fell, sending the 10-year yield 7 basis points higher to 6.76 percent.

    “Equities are suffering and in an environment of increasing uncertainty core European bonds are benefiting,” said Nick Stamenkovic, a fixed-income strategist in Edinburgh at RIA Capital Markets Ltd., a broker for banks and investors. “There’s a credibility gap in Greece and markets want to see clear signs of implementation.”

    The two-year yield fell 8 basis points to 0.98 percent as of 11:50 a.m. in London, its lowest since Bloomberg started collecting the figures in 1990, according to generic data. The 1.25 percent security due December 2011 rose 0.14, or 1.4 euros per 1,000-euro face amount, to 100.49.

    The 10-year bund yield fell 5 basis points to 3.12 percent. The security headed for its fifth weekly advance.

    2010 Advance

    German bonds climbed 1.6 percent this year according to Bank of America Corp. data, after sliding 1.1 percent in the same period in 2009, as data indicated the recovery may be slowing. European Central Bank President Jean-Claude Trichet said yesterday that the economic recovery is likely to be uneven and kept the main refinancing rate at a record low of 1 percent.

    U.S. Treasuries have also returned 1.6 percent this year, while U.K. gilts advanced 0.9 percent, according to indexes compiled by Bank of America’s Merrill Lynch unit.

    German industrial production dropped 2.6 percent from November, the Economy Ministry said today after a separate report yesterday showed factory orders unexpectedly fell at the end of last year. Spanish gross domestic product fell 0.1 percent in the last quarter of 2009, declining 3.1 percent from a year earlier, the Bank of Spain estimated today in its monthly bulletin.

    The Dow Jones Stoxx 600 index of European shares fell 1.9 percent, while the MSCI World index dropped 1 percent, the third straight decline for both measures.

    Greek Prime Minister George Papandreou pledged this week to freeze state workers’ pay, boost fuel taxes and raise the retirement age to reduce a deficit that is more than four times the European Union’s limit.

    Greek Spread

    Investors are demanding more yield to hold Greek securities rather than German debt, even after EU Monetary Affairs Commissioner Joaquin Almunia said this week the bloc endorses the Greek plan.

    Trichet said yesterday he’s “confident” that Papandreou’s government will do what is necessary to bring the deficit down to the EU’s 3 percent target. The economy of the 16-nation euro area is solid and its budget shortfall will probably be smaller than those of the U.S. and Japan this year, he said.

    The so-called yield spread between Greek and German 10-year bonds widened 12 basis points to 365 basis points, or 3.65 percentage points. It reached 396 basis points on Jan. 28, the most since 1998.

    The Spanish-German spread widened 3 basis points to 100 basis points, and the Portuguese yield premium over bunds rose 4 basis points to 163 basis points.

    Euribor futures contracts expiring in December rose, pushing the yield down8 basis points to 1.37 percent, as investors added to bets the ECB will keep its benchmark rate on hold this year.

    ‘Dress Rehearsal’

    Credit-default swaps on the sovereign debt of Greece, Spain and Portugal rose to record high levels, according to CMA DataVision prices.

    Contracts on Greece climbed 19.5 basis points to 446.5, Spain increased 13 basis points to 183 and Portugal increased 9.5 basis points to 239, CMA prices show.

    The cost of insuring against U.S. and U.K. debt defaults may rise in the same way as it has for so-called European peripheral nations including Greece and Portugal, Deutsche Bank AG said in a research report today.

    “The problems currently faced by peripheral Europe could be a dress rehearsal for what the U.S. and U.K. may face further down the road,” Jim Reid, a strategist at Deutsche Bank in London, wrote in the note. “These countries have similar issues to those facing peripheral Europe, but have the luxury of a flexible currency up their sleeves as a first defence if the market wants to attack them. Such a defence means that the market, for now, thinks there are easier targets.”

    Hmmmmmmmmmmmmm I thinks interest rates are on the up and up.

    old ways to wealth may not work any more.

    Let the property bubble inflate, it will be so much more of a pop.

    I will smile at the speculators who are squirming under the weight of repayments.

    I was in that position in the 1980s highly in debit (rates at 18%) hoping that some would save my bacon and buy a property from me.

  13. North-East Business News RSS Feed

    Action group launches fight to save the savers

    10:44am Tuesday 2nd February 2010

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    By Jeremy Gates »

    THERE was something grimly ironic about the recent launch of an action group to champion the rights of savers, a species that is threatened with extinction.

    Save Our Savers is a group set up to try to protect our precious savers from the out-ofcontrol spending that has occurred in the past decade.

    However, its launch came in a week when a big jump in inflation means most savers are now losing money on savings in banks or building societies.

    The Reverend John Strain, a parish priest and spokesman for Save Our Savers (SOS), said: “Savers have been far off the political radar for decades now, but the disregard for the plight of savers has shattered public trust in the policymakers.

    “Anyone would think Government doesn’t want people to provide for themselves, and would rather we all borrowed and spent our way into old age dependency.”

    Mr Strain, also an advisor for work, economy and business to the Diocese of Guildford in Surrey, said: “We have hardly heard a peep so far from any of the main parties in favour of savers, but as they gear up for the General Election, every vote will count.

    Savers form a huge constituency, and this time it will be a powerful and vocal one.”

    That’s fighting talk, but most savers are now losing money on their savings.

    Moneysupermarket.com says that of the 261 easy access accounts for balances of £1,000, not one pays enough interest to negate the combined effects of inflation and tax. Meanwhile, only 14 out of 42 regular savings accounts pays interest above 3.63 per cent for basic rate taxpayers, to leave them notionally in profit.

    To add insult to injury, better paying bonds over one, two and five years (all covered by the Government’s £50,000 guarantee) are mainly provided by foreign banks.

    The best one-year bond, at 3.65 per cent on a minimum £1,000 deposit, is FirstSave (First National Bank of Nigeria).

    ICICI (Indian bank) offers 4.25 per cent over two years (minimum £1,000) while State Bank of India tops the charts at 5.25 per cent on five years (minimum £10,000).

    Although locking into a five-year bond today is risky, when rates could rise soon, the five-year bonds paying monthly income from Saga (5.10 per cent, minimum £1) and Aldermore (5.15 per cent, minimum £1,000) are also attracting investors who need to top up pensions.

    If savings is one disaster area, private pensions are an even bigger mess.

    Yet as SOS sails into battle, another attack on private sector pensions may be under consideration.

    John Broome Saunders, actuarial director at BDO investment Management, said the Government could try to tax the lump sum payable on retirement – which pensioners currently take tax-free – by a devious piece of accounting.

    He said: “The clever thing to do would be to introduce a lower rate tax on the whole lump sum and, at the same time, increase the current 25 per cent allowance to offset this. pension scheme members would take home a similar, or possibly higher lump sum, and therefore wouldn’t feel too upset.

    “Moreover, the Inland Revenue would get an immediate boost to tax revenues – about £1bn per year from a 20 per cent tax on the lump sum.

    “Of course, pension scheme members would lose out in the longer term, as they would end up with lower pensions.”

    Other pension experts say this plan is unthinkable, because the Government dares not do further damage to the already battered image of private pensions.

    “A more likely line of attack,”

    said Laith Khalaf, pensions analyst at financial advisor Hargreaves Lansdown, “is higher rate tax relief on pension contributions by higher paid workers.

    “This serves a political purpose: Politicians can say they are taking money from fat cats to help the lower paid, and the limit at which it takes effect could steadily fall, possibly all the way from the £150,000 threshold announced in April last year to perhaps £50,000 in due course.”

    Pound notes

    THE traditional ISA season, to beat the April 5 deadline, has started early this year, said Michelle Slade at Moneyfacts.co.uk. Her top selections for variable rate cash ISAs are Manchester BS (3.01 per cent, 60 day withdrawals, min dep £1,000); Newcastle BS (three per cent, 120 days, £500) and Buckinghamshire BS (2.82 per cent, 180 days, £100).

    ■ The Skipton BS decision to bump up its standard variable rate mortgage rate could trigger a rush to remortgage onto fixes in the next six months, according to Santander Mortgages’s Remo Index. The society has a two-year fix from 3.29 per cent, with maximum loan-to-value 60 per cent.

    Moneysupermarket.com says there are now 2,500 mortgage products available for the first time since May last year.

    ■ Although two-thirds of financial planners say investments in fixed-income funds should continue to account for 11 per cent to 25 per cent of their clients’ personal portfolios this year, there is a need to diversify the funds chosen.

    That’s the conclusion of research by The ABC of Bonds Roadshow.

    ■ For 11 million households with a mortgage, there is a silver lining to recession, said Andy Gray, Barclays head of mortgages, in light of the information that average monthly mortgage repayments have plunged from £607 in December 2008 to £497 now.

  14. Australia Has Highest Household Debt to Disposable Income Ratio in World

    By Dan Denning • February 3rd, 2010

    Paul Volcker is fronting the U.S. Congress to push for restrictions on the proprietary trading desks of U.S. banks. The RBA stunned economists yesterday who had unanimously predicted the central bank would raise the cash rate to 4%. It did no such thing. Stock indexes in the U.S. rallied over one percent, but jobless figures come out later this week. And that makes everyone nervous that despite the nice recovery narrative, the economy still sucks for real people.

    So we'll see how it goes in Australia today. Our general survival strategy at the moment is to gradually reduce exposure to all but a select portfolio of stocks that are leveraged for big returns. As to the first issue - reducing exposure to stocks - now might be a good time, according to Morgan Stanley economist Gerard Minack.

    Minack reckons we're in for a correction after this 9-month "relief rally." In a note to clients Minack wrote, "We see the rise from March 2009 as a typical relief rally that follows major bear markets. Those relief rallies can occur regardless of underlying macro conditions, regardless of liquidity conditions and - most importantly - regardless of what happens next....The fundamentals did improve this time - systemic financial crisis ended - but we think risk assets have swung to pricing a better outlook than is likely."

    Minack says that while the rally could take developed market equities up to 75% or so from their March lows last year, a 25% correction is now in order. To be fair though, he doesn't think the market will make new lows after that - only that it's gotten way ahead of itself at these levels.

    The Grand Old Man of Dow Theory, Richard Russell, is even more direct. He's predicting a "second round of pain" for stock markets. He wrote, "I note that most analysts are now bullish, and that they are recommending stocks for the 'continuing advance.' At the same time, most economists are optimistic, arguing that the 'longest recession since World War II has ended.'"

    "Typical, last March everyone was bearish and the market was establishing a temporary bottom. Now that everyone is optimistic, the stock market is topping out and the public (the amateurs) are about to receive their second round of pain," he wrote. Ouch.

    To protect investors from this pain, the editors of our three financial newsletters have been using trailing stops and stop-losses on open positions (as rough guides). They are not always popular with readers. But they do save you from having your capital destroyed in bear market moves. If you're not using them, now would be a good time to seriously reconsider it.

    With the Boomers now heading slowly for the exits of the share market (converting their portfolios into income they can consume) the 'weight of money' argument for owning a basket of blue chip Australian stocks has never looked so light.

    We could be utterly wrong, of course. But why not own a handful of smaller miners and small caps where business growth leads to real earnings growth and higher share prices? Surely this is a better bet that buying and holding for the next ten years, isn't it?

    The best financial survival strategy of the coming years begins with not expecting the share market to be a retirement machine. True, the compulsory super tribute will probably be raised and this should bring more liquidity to stocks (and government bonds). But what you're looking for are good businesses, not just a good stock market.

    Australia's household debt to disposable income ratio

    Australia's household debt to disposable income ratio

    Source: Australian Bureau of Statistics

    Did you know that Australia has the highest household debt to disposable income ratio in the world? It's even higher than America's. Bigger homes. Bigger waistlines. Bigger debts. Australia is in the middle of its own credit boom, complete with all the social consequences. And the financial consequences.

    The chart above doesn't have the most recent data. It appears to show a gentle decline in the household debt-to-disposable income ratio. Since then, though, due to higher debts and income growth that's not quite kept up, the ratio has turned up again. It's around 156% today, largely thanks to the mini-boom in mortgage lending spawned by the diabolical first home owner's grants.

    Speaking of which, Fitch Ratings chimed in with a gloomy forecast for Australians overnight. It said that rising interest rates in 2010 would trigger more home loan and commercial mortgage defaults. It said this would cause some "deterioration" in the quality of assets that underpin mortgage-backed bonds. Hmm. That sounds soooo familiar.

    Even though Aussie rates did not rise yesterday, they are at the low end of their historical cycle. You'd expect them to go up more this year. And Fitch says that's bad. "The improvement in Australia's structured finance asset performance, which was experienced during 2009 thanks to historically low interest rates and a resilient economy, is unlikely to continue during 2010," said David Carroll, the director of Fitch's Australian structured finance team.

    Fitch is talking about bonds and structured products made up of mortgages and commercial real estate leases. That's an interesting story and will affect the quality of bank assets (and perhaps mortgage funds and listed property investments). But the real story, politically, is whether all those first home buyers who encounter mortgage stress will want to vote for Kevin Rudd again.

    By the way, we copped it big time from dozens of readers for dipping our toe into the climate change debate a few weeks ago. We were told - sometimes not so politely - to stick to our knitting (even though the topic has clear implications for the economy and financial markets). By bar the most often repeated objection to our "infantile" thinking was that the science behind climate change is not disputed and that it's all peer reviewed in a process that's non-political, objective, and thorough.

    Harrumph. The bigger the lie is, the harder it falls.

    Dan Denning

    for The Daily Reckoning Australia

  15. Well, it's nice to see that the mainstream media have started to wake up about the lies surrounding the housing shortage.

    Eagle-eyed Money Morning reader Gary sent us this link to The Australian:

    "Homeless figures are 'distorting housing shortage'"

    Nice work. It's just a shame we revealed that fact back on August 24th last year when we wrote, "Revealed: The Housing Shortage Lie."

    In the article we quoted from the 'National Housing Supply Council State of Supply Report 2008.' It contained the following passage which simply blew us away:

    "The Council estimates that a minimum of around 85,000 dwellings is the gap (unmet need) in the supply of housing in 2008. This is based on the incidence of homelessness and the low level of vacancy rates in the private rental market."

    That's right, as we pointed out in August, and as The Australian newspaper pointed out last week, the housing shortage crisis is based purely and simply on the number of homeless people.

    But we won't get too excited about the possibility of the mainstream media mending their ways. Because right on cue, last Thursday the same newspaper gave you, "House prices soar 12pc amid recovery."

    Ah, the good old days are back. Amusingly the article finishes with the line, "RP Data said the figures released on Friday were likely to provide a far more conservative view of market conditions."

    Ha, ha, the arch spruikers trying to keep a lid on things. Love it.

    And indeed RP Data did produce a "more conservative" number. It claims national dwelling values were down 0.3% during December.

    But not surprisingly, the report is another hodge-podge of confusion. Take a look at their latest press release to see if you can make head or tail of it.

    But perhaps the best bit of spruiking was in a little noticed article on Business Spectator, titled "Housing affordability steady over 6 years: Rismark."

    The article by a "staff reporter" states:

    "The perception that housing is becoming less affordable is untrue, according to a new housing index which indicates affordability has remained steady or even fallen over the last six years. Investment strategy firm Rismark Australia has released a new index that shows median house prices remained between 3.7 and 4.3 times disposable income over the last six years. Currently, the index has median house prices at 4.1 times household disposable income, while it was 4.2 times disposable income at the end of last year."

    If only the guys at Demographia knew this they wouldn't have bothered releasing a report that claims Australia's houses are the most unaffordable in the world ever.

    And it flies in the face of the latest research from Fujitsu Consulting which claims that by the end of 2010 "747,000 households [will be] in some degree of discomfort and those in severe stress perhaps as high as 307,000; with around 40,000 defaults annually."

    We don't know the guys at Demographia and Fujitsu Consulting from a bar of soap, but we're happy to give their research some airplay. If it achieves nothing else it will help to balance out the pap you're constantly bombarded with by the mainstream press.

    But back to the Business Spectator article. We do love Rismark for their balls. If they don't like the numbers given by someone else then they go away and make up their own numbers. And voila! House prices are cheap.

    Anyway, we'd love to know how Rismark came by their figures, because as usual none of it makes any sense.

    The article states: "In the meantime, the rise in median house prices has been lower, at 41 per cent, from $270,000, to $380,000."

    Oh yeah? Here's a screenshot from the RP Data homepage early last week:

    And here's the screenshot following the release of their December numbers:

    In neither case is the national median house price anywhere near $380,000. Although we're not quite sure why Rismark even references the median price anyway, seeing as they're so scornful of it.

    So, we'll ignore the $380,000 number and instead look at RP Data's median price of $451,000.

    Anyway, Christopher Joye repeats the claim about the income to house price ratio in the RP Data press release:

    "It pays to remember that the price of Australian homes is only around 4.1 times disposable household incomes, which has been unchanged since September 2003. This tells us that over the last six years Australian house price have very closely tracked changes in household incomes. Contrary to popular myth, Australia's house price-to-income ratio is not unusually high, nor has it risen in recent times."

    Really? Well let's take a look at that shall we.

    Based on the number from Joye that "Australian homes is only around 4.1 times disposable household income", if we use the number from RP Data's own website that would mean the household disposable income is $110,000.

    Remember, that's after tax and after the Medicare Levy. It would suggest a monthly cash income of $9,166, or $2,115 per week.

    So, the first question we can ask is whether we think that's believable?

    For a start it isn't clear whether they're referring to median or mean income. So we'll let's look at the median first. Using Rismark's 4.1 times numer, that would mean if you line up the individual disposable household incomes for every household in Australia, the number in the middle would be $110,000.

    Half the households would have a lower income and half would be higher.

    But here's where it gets problematic. Because if we refer to the Australian Bureau of Statistics (ABS) Household Income and Income Distribution report for 2007-08, the median gross - not disposable mind you - household weekly income would be somewhere in the range of $1,200 to $1,399.

    So even if we take the top of the range of $1,399 that still only puts the before tax annual household disposable income at $72,748, a full $37,252 below Rismark's supposed after tax number of $110,000.

    But let's look at it this way. If we take Rismark's $2,062 household disposable income figure, then according to the ABS data even if we assumed the household paid no tax they would still be in the top 20% of household incomes.

    So that clearly can't be the median.

    If we then use the same ABS gross numbers to see where it pinpoints the median, well, it's a whole different story...

    Based on a split of households, the median gross household income per week falls somewhere between $1,200 and $1,399. So, to be fair, let's split the difference and say the median gross household income in 2008 was $1,300.

    Now remember, this is gross. So you'd think the Rismark net number should be less than that. But it's not. In fact, using Rismark's assumptions, the disposable income would be about 50% higher than the ABS's recorded gross household income.

    That just doesn't make sense.

    But let's be kind to Rismark and say that perhaps due to a bunch of tax breaks and some - hehem - creative accounting, the ABS's median household managed to get away without paying any tax so their disposable income was the same as the gross: $1,300.

    Annualise that and you've got a "disposable" income of $67,600.

    Compare that to RP Data's national median house price of $451,000 and you can draw your own conclusion.

    But to help you out, that works out as 6.67 times household income, not 4.1 times.

    Somewhere there's a problem with the numbers.

    Even if we remove all the incomes that receive government benefits then the median still only comes in at $1,634 per week or $84,968. And remember, that's gross income, not household disposable income.

    That gives you a median house price of 5.3 times median gross incomes.

    Now, Mr. Joye does claim that their income numbers include all sources of income, not just wages. He claims it includes investment income as well.

    But the ABS numbers also do that. And still it doesn't come close to his 4.1 times.

    Even if we use the higher mean average of $2,007 per week that would still only give a gross - not a disposable - income of $104,364 per year. That still puts housing at 4.33 times gross income.

    So even if we're being kind, the disposable income figure is going to be around $85,000 per year, making house prices 5.3 times income.

    Whichever way you slice and dice this, you can't seriously come up with a disposable income of $110,000.

    But what about this research from Demographia. It paints an even worse picture. According to their housing affordability numbers, they've got Sydney house prices at 9.1 times median gross household income, and Melbourne at 8 times median gross household income.

    That makes both cities "Severely Unaffordable."

    However, we will point out one tiny fly in the Demographia ointment. Naturally enough, they use the median household gross income for the entire country, yet they've used median house prices for specific cities.

    Clearly that's not going to provide a completely accurate picture as we can assume the median income in Sydney will be higher than the median income in Dubbo or Newcastle. Although of course it's always dangerous to assume.

    So in that respect we'll probably argue that the 9.1 times figure for Sydney overstates the true picture. But by the same token, there's no way it's anywhere near the 4.1 the spruikers at Rismark claim.

    Our figure of somewhere between 5 times and 7 times is probably as close as you'll get to an accurate figure.

    But even so. Even if we forget about what the 9.1 times figure refers to, just the comparison to other cities is enough to tell you that Australian house prices are heading for a monumental crash.

    And how about the Fujitsu Consulting research [Ed note: click on the link and enter your details. Fujitsu will email the report to you]. That report indicates 200,000 households in Australia are experiencing 'severe' mortgage stress.

    And remember, it forecasts that number to increase by 50% by the end of this year.

    But let me draw your attention to the image below. The blue line indicates the 'severe' stress levels and the yellow line is the RBA cash rate:

    The interesting point to note is that the number of households forecast to be in severe stress by the end of this year will be roughly the same as those that were in stress when the RBA had interest rates above 7%.

    Yet forecasts are that the RBA will only increase rates to around 6% by the end of this year.

    It's a perfect example of how the 'normal' interest rate levels have been distorted by artificially low interest rates. So that all the first home buyers who were suckered in with bribes and low interest rates will start to face 'severe' mortgage stress at a much lower interest rate level than previously.

    However you look at it, trying to claim that house prices are only 4.1 times the median household disposable income is just pushing things that little too far.

    Doubtless Rismark are using a hedonic incomes index with a fancy formula which will 'prove' they're right. But what it probably means is that your income is recorded as higher if your neighbour happens to get a pay rise!

    We wouldn't put it past them.

    Cheers.

    Kris.

  16. Aussie's struggle to foot mortgage bill

    * From: The Sunday Telegraph

    * January 31, 2010 3:17AM

    The great Australian dream is dying

    First home buyers lured into the housing market by government grants are struggling to meet mortgage repayments.

    * 45% of first home owners in mortgage stress

    * Homebuyers using credit cards for repayments

    * Numbers to worsen as rates continue to rise

    ALMOST half the first-home buyers lured into the market by the Rudd government's $14,000 grant are struggling to meet their mortgage repayments and many are already in arrears on their loans.

    Thousands of young homebuyers are using credit cards or other loans to meet obligations, while those in "severe stress" are missing payments, the Sunday Telegraph reports.

    Just weeks after the grant was officially withdrawn, a survey of more than 26,000 borrowers conducted by Fujitsu Consulting revealed that 45 per cent of first-home owners who entered the market during the past 18 months are now experiencing "mortgage stress" or "severe mortgage stress".

    Those numbers are likely to worsen in the next 12 months as interest rates rise by an expected one per cent. On Tuesday, the Reserve Bank is almost certain to raise the cash rate by 0.25 per cent to four per cent, taking the typical standard variable mortgage rate to around 6.90.

    If lenders pass on the hike in full it will add $47 a month to the typical $300,000 mortgage.

    "The dream of home ownership has turned sour for many thousands of first-home buyers now that the reality of rising interest rates is kicking in" said Martin North, managing director of Fujitsu Consulting.

    "Rising utility costs and school fees are also cited as reasons for hardship, and many first-home owners are living without proper furniture or carpets as they divert all their cash to their monthly repayments."

    During the past 18 months, more than 135,000 first-home buyers have entered the market, encouraged by grants of up to $24,000 in NSW, plus as much as $18,000 in stamp-duty relief. More than 50 per cent of first-home owners are forecast to fall into the mortgage stress category by the end of 2010.

    The crisis will be seen as vindication for critics of the stimulus program, who argued that the Government was enticing buyers who were not financially ready for home ownership.

    Steve Keen, professor of economics at the University of NSW said last year that the homeowner grants were a "disaster waiting to happen".

    "The grant panicked first-home buyers to rush into the market, which pushed prices up by far more than the grant itself," he said yesterday.

    AMP Capital chief economist Shane Oliver said: "This is a scary survey. It provides a clear warning to the RBA not to push rates up too far or too fast."

  17. You make the mistake of not considering the 70% of owned homes, thinking that buying a house is some sort of god given right and not allowing for inflation. What a disgusting left wing duffle coat wearing notion that is.

    I suspect that if you had a reality injection you would be far better of enjoying subsidised rent before you eat dirt, it would be better for you and you r family to take this stance than to expect a free ride in the market.. If you really wanted to buy a house and not eat dirt then you could always buy an affordable house but that would be to hard as again it doesn’t come on the gravy train.

    Well here are the basic human needs that are given in a civilized society: food , clothing and shelter.

    These things are given because if they are not society soon degenerates to capitalism at its most extreme.

    My affordable house will come very soon, yes soon I will go around with a shopping trolly full of house keys.

    All aboard the housing gravy train, this express train is close to comming of the rails but should it continue the next stop will be -10% town ,if you choose to get of please hand your wallet to the banker waiting in the shadows. Or you may wish to continue the next part of the journey is called the negitive equity leg. this is a long, dangerous and bumpy ride.

  18. So, according to the Australian Bureau of Statistics it looks like a price:earnings ratio for Australia is around 8:1

    With rising interest rates.

    At a base rate of 3.75% I'd guess around 6-7% is average for a repayment mortgage.

    So with a £10k deposit on a $400k house we're looking at interest over a 20 year term of about 115% of the mortgage principal.

    So, a total cost of $848,500 for an average home.

    On a monthy average wage of just under $4000/month gross

    So around $3120 after tax.

    With monthly mortgage payments of $2600.

    Spot On!

    I have a young freind getting in to exactly the finantual situation you have out lined.

    Every interest rate increase depresses him ( should be one on Tuesday)

    He hopes the economy will go down so that interest rates will not go up, But he doesnt understand interest rates are soon to be out of the governments control.

    he some how thinks he will make a fortune!

    He thought the same when he lost $10,000 in the share market crash!

    He thought the same thing when he lost $6000 later in the casino!

    You cant put a old head on young shoulders

    So $520/month for other expenses like eating and running a car.

    Yep, I guess you're right not to worry, there's at least another $50k of rises to factor in before people have to eat dirt.

  19. What is property priced for?

    But then we hear from other property investors who tell us that we're wrong to criticize the growth claims of property, because property investors aren't stupid and they know property doesn't double every 7-10 years.

    Property investing is about the income, they claim. Not only that, but it's the income aspect of property investing that will prevent the housing market from collapsing because investors will just put their rents up!

    That's where we get confused. Because there is absolutely no way on earth that property investing is priced for income. Not a chance.

    Let's use some data from our old pals at RP Data. We'll forget about whether it's based on median or hedonic or median hedonic because, well, we're not even sure they know.

    Anyway, their last much maligned - by us - press release suggests the "Quarter Yield Results" for Melbourne houses is 3.68%. And that's the gross number.

    In other words, a house that sells for $400,000 is yielding approximately $14,720 per annum in gross rental income. Gross rental income. Remember that, "GROSS."

    If we also consider the other mantra of property investing is debt and leverage then we can fairly assume that the $400,000 property isn't paid for in cash. So we'll be generous and say it's covered by an 80% mortgage.

    That results in a mortgage of $320,000 paying interest of $21,152. And that doesn't include any repayment of principal - so add a few grand on top of that.

    Now, remember we're not factoring in tax deductibility here, but in simple terms an investment property is a cash negative investment. It produces a negative yield. Or as the spruikers like to term it 'negative gearing.'

    Somehow, in the mists of time, negative gearing has entered the investment psyche as a good thing to do. Even though a five year old can look at those numbers and tell you that a good investment isn't one where it costs you to own it.

    But let's not forget something else either. Although we haven't factored in the tax 'benefit' of negative gearing, we also haven't factored in other ownership costs either such as real estate agent fees, maintenance costs, and periods when the property is vacant.

    From a yield perspective, property investing is so far into the red it isn't funny.

    So, we can quickly conclude, that whatever our property spruiking friends tell us - the ones that try to play down their own doubling every 7-10 years rubbish - that property investing has nothing whatsoever to do with deriving an income from it.

    Simply because it does not produce an income. It only produces an expense.

    Therefore, we should be able to agree that property is not priced for income. That much is obvious.

    If it was priced for income then having a negative yield would imply that a property investment is an infinitely safer investment than a government bond.

    Governments riskier than tenants

    It would imply that a tenant in a rental property is more likely to pay their rent on time, or indeed at all, than the government is to pay the coupon on a government bond.

    Even your editor finds that argument hard to fathom. And we're no fan of governments.

    That means property can only be priced for growth. But even then we're stuck. Because any growth asset still has to be priced on something.

    It's usually priced on its profitability. In the stock market you can work that out based on the company profits and comparing it to the share price. That's the price to earnings or PE ratio.

    But with property there is no income. It's a negative income. And it can't even be argued that we should use the gross yield as the income figure. Because the interest cost is a vital component. And it's the interest cost that puts the yield into negative territory.

    So, back to our original question, what does the yield tell you about an investment? In the case of property, a negative yield simply tells you that the price action is influenced by one thing and one thing alone...

    And that is the belief among property investors that property prices will always go up.

    We know that there is no income from buying property so investors don't consider that when they buy - whatever the spruikers and one-eyed investors will try to tell you.

    Their only rationale for buying is the belief that if they buy today they will be able to sell to someone else at a higher price in the future.

    That is an irrefutable fact.

    What is also irrefutable is that it's the same thought process that hundreds, thousands and indeed millions of other investors have had throughout history - during every other asset bubble - the belief that regardless of the price they pay today that they'll always be able to sell it to some other sucker for a higher price in the future.

    Cheers.

    Kris.

  20. Majority of Australians Believe House Prices Will Rise in Next Twelve Months

    84% of Australians think house prices will rise in the next twelve months, according to the January Westpac-Melbourne Institute Consumer Sentiment Survey. Mr. Reality is clearly giving these Australians a wide berth. Twenty one percent of those surveyed believe house prices will rise by 10% or more in the next twelve months.

    Doing a little back of the envelope math, and if our calculations are correct, a $450k property compounding at 10% a year for 10 years would turn into a $1.16 million dollar property. It would be a gain of 160%. And one million dollars would be the new median house price in Australia.

    Now you have to assume a lot of income growth from here for affordability to remain the same with house prices at those levels. Or you'd have to assume much lower interest rates. That would be a stupid assumption, though, given that interest rates are headed up at the moment, and that we are likely at the low end of the interest rate cycle.

    Perhaps the 21% of people believe house prices will go up by 10% a year are all real estate agents and bankers. Or perhaps they are functionally illiterate in the financial sense. Either way, it's a large percentage of people surveyed to believe such clap trap. It's this kind of belief that is the rocket fuel for the blow off stage of a bubble.

    But we're not going to win that debate this week. We'd just like to point out that this is whole point of the Daily Reckoning really, to scrutinise received thinking and conventional wisdom. Whether it's the housing bubble, the economy, or global warming, your best defence against a world full of bogus thinking is to question it.

    Of course that doesn't mean you'll always be right. For example, we're obviously not a climatologist. The mail bag was full of some choice words for the comments we published last week (Burn More Coal). The polite synopsis is that we were told to stick to our knitting.

    But calling out mainstream thought IS our knitting. And climate change is fair game because the financial stakes are extremely high. Indeed, all the stakes are high (political too). We're not going to rehash the argument here. However, if you don't like uncomfortable ideas, don't read them!

    Don't worry though. We will say, yes, most of the time our beat here is investing. And there is plenty to think and write about on that score. So we'll get back to the main game this week. Until tomorrow!

    Dan Denning

    for The Daily Reckoning Australia

  21. My Gess is a 10% drop in house prices this time next year, thats if things slowly unwind , if things go belly up like i think 35% in 2 years. Like I say my gess is 10% drop in one year as the money from government drys up. If we get high intrest, defaults, high unempoyment it will crush the Australian property prices over 2 years.

    So now Bardon you and I will see just who becomes the winner out of our investment plans as yours are the opposite of mine.

    luck will not help you or me just our interpertation of current happenings and our gess for out comes.

  22. I will say that the population in Australia and world wide is a high point , it will only take a small climate disturbance to send millions starving,

    Take a look around people go with out , go to bed hungery wake up feeling hungery that is true hardship and the fact is many of those people have this hope that there situation will get better,

    Blind hope is as usefull as no hope

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