Australia Faces Its Demons

[blue skies]

dont you belive it for a minute this red haired commy is all for carbon tax

Ha ha ha

Well what I mean is that the right faction of the labour party that got her in will be pulling the strings as much as they dare.

Carbon tax is out, boat people are unwelcome.

But the mining tax is above interparty politicts, it will be needed and I think in all probability will be passed as law.

I allso think she will beat the Mad Monk in a election.

[JonoP]

dont you belive it for a minute this red haired commy is all for carbon tax

Heh heh, well phrased.

It does give me a tremendous sense of deja vu though. Unelected socialist gains power at the height of a credit boom........where have I come across that before :-)

[aussieboy]

i aint partial to the defrocked one either but I hope he whips her barren ass.

Out of order, bardon.

We've already gathered that your not keen on homosexuals. Judging by this stream of invective, it looks like you have a problem with women too. It's beginning to look like a winkie issue.

[blue skies]

at least this bitch doesn't have long to run

i should add that while I consider her in the same light as a slag heap I have meet here and she was pleasant but I know her kind

Bardon you gota stop drinking!

[blue skies]

Heh heh, well phrased.

It does give me a tremendous sense of deja vu though. Unelected socialist gains power at the height of a credit boom........where have I come across that before :-)

Paul Keeting ?

[blue skies]

Bardon people like you shoudnt drink!

[blue skies]

what do call some one who:

cruely cuts another to the bone without provication ?

[aussieboy]

What are the rules of order?

It depends on the environment, whether it be a working mans club, an aboriginal coirberah a white middle class wine club, or the old bys club.

When it comes to her casual relationships and choice not to be a mothe , this is public. I love homosexuals (ha ha as long as you dont recieve you aint one) they are great guys, but taffy. dry, red headed, communist,, back stabbing, hetreosexual,,tax leviers, I just cant help my emotions getting in the way. Even I have human weaknesses..

Just as a comparison, I have Maggie about 20 times more proficient than this harlot. That is not because she married a man and had had baby shopkeepers either.

The lady is red. I know this.

No - relativism is the last refuge of a scoundrel. Perhaps you also think that Andrew John's had a fair point because he only called someone a black **** in a locker room rather than in a church.

There are absolutes in this world. Your latest post where you bizarrely conflate a dislike of her political leanings with oddball comments such as "dry" and "harlot" makes you look painfully like an ignorant mysogynist and a fool who has a serious problem... which perhaps, given your persistence on this matter, you are.

It was nice being you for a while, but I think I'd rather be confused with blue skies now, who actually seems rather sane in comparison.

[jackalope]

what do call some one who:

cruely cuts another to the bone without provication ?

This is only true if she reads this forum and cares what Bardon thinks about her.

Both seem quite unlikely.

Edited June 25, 2010 by jackalope

[gus]

What are the rules of order?

It depends on the environment, whether it be a working mans club, an aboriginal coirberah a white middle class wine club, or the old bys club.

When it comes to her casual relationships and choice not to be a mothe , this is public. I love homosexuals (ha ha as long as you dont recieve you aint one) they are great guys, but taffy. dry, red headed, communist,, back stabbing, hetreosexual,,tax leviers, I just cant help my emotions getting in the way. Even I have human weaknesses..

Just as a comparison, I have Maggie about 20 times more proficient than this harlot. That is not because she married a man and had had baby shopkeepers either.

The lady is red. I know this.

We'll keep a welcome in the hillside for you; just let us know when we can expect you.

[Alan B'Stard MP]

Never trust r-a-n-g-e-r-s from Adelaide.

Don't ask me why

[blue skies]

Australia on the verge of property bubble crisis

Dennis Pots Jun 23rd, 2010 Featured News, Finance, Photo Gallery. RSS 2.0.

For the past 60 years, real estate prices in Australia have inflated drastically in comparison to other well-developed countries. The rise has been quite obvious from 1997 until 2004 but there has been a resurgence of property bubble from 2008 until 2010 where prices of real estate have already reached to unaffordable levels when compared to the average income of the general population. While the rest of the global piece have adjusted fairly to the current economic recession through the reduction of housing costs, Australia’ s real property investments have since doubled.

Even the Australian government, through the House Price Index data released by the Australian Bureau of Statistics, admitted that prices in real estate properties at the country’s capital cities have risen to 20% in just 12 months. In Canberra for instance, average houses cost around 495,000 Australian dollars to date while prices in Melbourne have leaped 21% marking at $549,980 and increase of $116,917 from the previous year.

Property bubble initially affects the local economy with an artificial rise of investments and spending in relation of real estate. But sooner or later, once the bubble reaches to its peak, Australia may soon suffer what several states in the United States have experienced particularly California and Los Angeles. When the United States’s housing sector bubbled way back five years ago (reaching its peak after four years) adjustable rate mortgages have adjusted in unprecedented levels as well. Borrowers have been convinced that they can eventually refinance their investments more favorably. This happened as loan packages, sales incentives and marketing benefits especially easy initial payment schemes have been introduced to the general market. But after a number of years when the bubble reaches its peak, prices of real properties begin to fall significantly and default payments and property closures rocked the volatile real estate economy. Easy credit condition pushed borrowers to access housing units drastically but when interests start to beset the average and low-earning population as other economic factors are beginning to affect them as well, repayment or real estate refinancing have become more difficult as they expect.

Prices of housing units in the United States such as those in California at present have deflated to a median 40%. Coupled with other issues like unemployment, several of these borrowers have already been burdened with sky-rocketing debts that they can no longer pay.

When the property bubble bursts, national economy will slump deep. For as long the bubble continues it will develop an artificial cloak to a volatile economy. In fact real property investments will increase figures in the domestic spending trends. But soon, investors in the Australian real property sector will suffer what their counterparts in past US property bubble–era have endured. For the promised superficial returns in the sector did not realize. And because real estate bubble have nowhere to go but to break apart, Australian economy will plunge deep into severe crisis that no monetary floatation can save.

Average Australian population can no longer afford the current housing prices. No wonder why twelve out of the twenty unaffordable real estate markets in the world are in Australia with the remaining are located in parts of Ireland, Canada, United Kingdom and New Zealand. In Sydney, properties now cost more than nine times the average annual income of families. In Newcastle, Adelaide and the remote Darwin, homes will cost around 700% of the current average household income a year. Banks and other market players in the real estate have now been spreading a borrowing euphoria with mortgage terms citizens can never pay during their life’s term. In brief, Australian is now entering an era which the United States have now been on the tip of. What Americans have experienced in urban and peri-urban Los Angeles Australians will sooner embrace.

But the fact that the prices of housing units in Australia are currently at unaffordable levels do not actually affect the real estate demand. The government, too, have pushed the button for artificial rise in real estate demand as incentives await those few early patrons. So expect investments in the sector will pull-in further. With mortgage conditions now available for low and average income earners to avail even if that will mean their lifelong term, many Australians are still persuaded to buying properties. They are caught in the belief that sooner their acquired properties will eventually increase in value and they can sell them at prices much higher than their mortgage payments- a belief that American history has already proven a sham. Sooner, what has become of Los Angeles and California will happen in Australia when the property bubble finally breaks out.

[aussieboy]

Perhaps I don’t and I am black and my wife is black. And as for relativism you really want to look at some of the slagging that goes around here if you want to try and be some kind of behavioural standard setter.

It’s not chicks I hate, it’s the labour party, communists, backstabbers, barren leaders and her kind that I hate. And I know her and her kind very well.

Maybe you are a poor judge of character. Mate it really doesn't worry me either way as you never were me and I don’t come here to make friends.. You can censor, set boundaries, express outrage and judge away to your hearts consent it doesn't change anything in my book. House prices will still rise 7-10% pa on average and Gillard is a slag heap.

Harlot, slag heap, barren... jesus wept.

[JonoP]

Paul Keeting ?

Gordon Brown :-)

[blue skies]

Bardon

Did it ever occure to you that following your comments about our leader, you will now be a person of interest to big brother?

No doubt he will have to spend countless hours trolling through you numerus postings and phone conversations.

Better start too sweat.

I

[Guest Noodle]

Though you would object, maybe you should send her some flowers to her Altona gaff if you feel so strongly about her, that might make amends for my commnets.

At home with Julia, or at least in same price bracket

Julia Gillard's home in the west Melbourne suburb of Altona.

IT'S A three-bedroom brick-and-tile home in the working-class west Melbourne suburb of Altona, 14 kilometres from the CBD.

And it's been home to the Prime Minister, Julia Gillard, since she paid $140,000 for it in 1998 - slightly less than Altona's median price of $155,000 at the time.

A neighbour's house - though double-storey with an extra bedroom - sold in March for $610,000, which is Sydney's median house price. So that puts Gillard's house in the $550,000 range, higher than Altona's median price of $535,000.

Advertisement: Story continues below''It presents very well,'' says Julie Burt, of Sweeney Estate Agents, who sold the neighbour's house. ''And Altona is an undiscovered gem with a beach that is very swimmable.''

Yet the general manager of valuers Herron Todd White, Michael McNamara, thinks many Sydney first-home buyers would turn their noses up at it.

''We have … built up expectations of first-home buyers so much that they purchase a property based on how much they can borrow rather than how much they can afford,'' he says. ''Once upon a time, people were prepared to live in modest-priced homes, but now … Why on earth do you need a big McMansion?''

An economist at research analysts BIS Shrapnel, Jason Anderson, says Sydney has plenty of affordable properties in the outer suburbs but some first-home buyers ''see it as a step down''.

Yet such properties had strong capital growth potential. ''You have clear undersupply,'' he said.

Australian Property Monitors nominated 10 Sydney suburbs that have a median house price close to Altona's $535,000. They include Bexley, Homebush West, Picnic Point, Dundas Valley, Narwee, Baulkham Hills, Engadine, the Ponds, Loftus and Asquith.

http://smh.domain.com.au/at-home-with-julia-or-at-least-in-same-price-bracket-20100625-z9s0.html

Quote similar to my house that. But no where near as quaint and lovely.

How much is it?

[Tiger Woods?]

Nott sure of the price but you can be sure that it has had a hefty growth in value in one week. People will pay over the odds to buy a house that the shortest serving PM lived in.

I suspect you will be right on that one. If she's not executed by the electorate then it will be death by Swanny.

The general feeling I get is that the people who voted Labour don't like what happened, and those that do like what happened didn't vote for Rudd in the first place. By all accounts the polls were beginning to turn back in Rudd's favour before this coup.

Silly, silly Labour party.

[Tiger Woods?]

Another box gets ticked off in the coal seam gas story

New Gladstone LNG project gets go-ahead

...

"It's also a lot of business for all of those companies that supply materials and goods and services from as far away as [Rockhampton], down to Chinchilla and Dalby.

Always make sure you drive through Gladstone at night...just love the lights on the pier...but don't stop.

Last time I saw Chinchilla was in 1977. There was a singing dog at the pub. My 8 year old self was very impressed.

[Guest Noodle]

Nott sure of the price but you can be sure that it has had a hefty growth in value in one week. People will pay over the odds to buy a house that the shortest serving PM lived in.

Do I take it Kevin's gone then?

[blue skies]

There is no GFC…

Published in June 27th, 2010

Posted by Steve Keen in Debtwatch

5 Comments

One of the unexpected things I’ve learnt in Boston is that the Global Financial Crisis is not called the Global Financial Crisis in America–and therefore the TLA of the GFC has no meaning here.

Instead, in America this might be The Crisis That Has No Name (TCTHNN), because they don’t call it anything at all: it’s just how the economy is right now.

Australians, it seems, are the ones who invented the moniker GFC as a way of describing what they think they don’t have to understand. Over here, where it is actually happening, it is just the day to day reality that must be contended with.

Even more peculiar is news from some finance sector insiders here who have been in touch with Australia’s RBA and Treasury, that they describe it as not the GFC, but the “North Atlantic Financial Crisis” (“NAFC”)–arguing once again by a label that this crisis is peculiar to the US and Europe.

Apparently when asked what Australia has learnt from the crisis, the answer was often “Nothing, because it didn’t happen here”. The Lucky Country, it seems, is seen as immune to the crisis by its economic managers.

I know that I’m more likely to be spoken to by Bears in Boston than Bulls, but even the Bulls find this Australian complacency–even smugness–about the crisis bemusing. One insider I spoke to–admittedly a Bear–commented that he found it so annoying on his last visit to Australia that he’s sworn never to return.

Good riddance might be the attitude of some; who needs the negativity? Well, we might, if the causes of the crisis are not in fact peculiar to the North Atlantic.

For though the GFC might have had very little bite in Australia to date (and I admit that the mildness of the downturn to date in Australia did surprise me) we can only kiss it goodbye if it was really just a Northern Hemisphere Black Swan. If instead its causes are more general, then as the US now starts to fear a DDR (Double Dip Recession), Australia might find that it’s not so Lucky after all.

Here there is one indicator that I think explains why Australia has not suffered as badly as its North Atlantic counterparts, but also why there will be no easy recovery: the contribution that rising debt makes to aggregate demand. Though I am a critic of the extent to which our economies have become debt-dependent, there’s one unmistakeable fact about our post-1970 recoveries: they have all involved a rising level of private debt compared to GDP.

I’ve recently done a comparison of how the US today compares to the US in the 1930s on this front, and the results–published in an earlier post–were intriguing.

The US was actually suffering a more severe private sector deleveraging this time than in the 1930s: in 1928, rising debt was adding about 8% to the level of aggregate demand. That is, demand was 8% higher than it would have been had debt been constant. By the depths of the Great Depression, falling debt was making aggregate demand about 25% lower than it would have been had debt been constant.

The story for today is more extreme: at the end of 2007, rising debt made aggregate demand 22% higher than it would have been had debt been constant–so rising debt today was almost three times as important in our pre-GFC boom as it was in the 1920s. Two and a half years later, falling private sector debt was reducing demand by almost 15%. This was not as bad as the worst levels of the Great Depression, but worse than in 1931, which was the comparable time from the beginning of the downturn in private debt.

The positive difference between then and now in the USA turned out to be the contribution to demand made by rising Government debt. The government-financed proportion of demand in the Great Depression was trivial two years into the crisis, and only became substantial–at about 7.5% of aggregate demand–three years in. In contrast, government spending is making aggregate demand almost 13 percent higher now. But even then, the USA is still deleveraging.

That’s the comparison the the USA today with itself 80 years ago; what about the comparison of the USA today with Australia today? The chart below provides it.

Firstly, Australia is running a couple of months behind the USA in the crisis. But that’s minor compared to the difference in scale. Private debt added slightly less to demand in Australia during the boom times–a maximum of 18.75% of aggregate demand was financed by private debt, compared to over 22% for the USA. But deleveraging hasn’t even begun here: the private-debt-financed contribution to demand flirted with zero in late 2009, but has been positive throughout. Rising private sector debt today is adding about 2% to aggregate demand. Rising government debt is adding about another 2 percent on top of that.

So Australia hasn’t yet delevered–in contrast to the USA. Does that mean we have a “get out of the GFC Free” card? That depends on whether we’ve avoided what caused the GFC in the first place–a runup of excessive private debt during a speculative bubble.

There the answer is equivocal. While we have substantially less debt than the USA (though some correspondents have argued that the RBA figures I use understate the level of finance sector debt here), our debt to GDP ratio is 90% higher than it was back in the Great Depression.

So we have less deleveraging potential than the USA, and we haven’t even begun to do it yet–which is why the GFC has appeared to be a North Atlantic phenomenon. And if we can prevent deleveraging, then we won’t see the depths of the downturn that the North Atlantic has seen either.

But there is a downside to no deleveraging. We have a household sector that is even more indebted than its US counterpart. The odds are that this sector will be debt-constrained in its spending, and the recovery will be stalled as a result. So the GFC is not entirely a NAFC.

[Tiger Woods?]

Seems like the moral of the story is that if you want to pop someone, do the deputy PM, as no one protects them.

[blue skies]

New home sales slump, prices stagnate

By online business reporter Michael Janda

There has been a fall in value of homes outside major cities.

There has been a fall in value of homes outside major cities. (ABC News: Giulio Saggin, file photo)

Two sets of private sector data show the Australian housing market is continuing to cool, both for new dwellings and existing properties.

The widely watched RP Data - Rismark Home Value Index showed a rise in city home prices of just 0.5 per cent (seasonally adjusted) in May.

While national city house prices were still up 12.1 per cent over the past 12 months, the rate of growth has slowed dramatically over the past three months with the index rising a modest 1.9 per cent.

Rismark's managing director Christopher Joye says weak home price growth is likely to continue for the rest of the year.

"With disposable household incomes forecast to increase by only around 5 per cent in 2010, we have long predicted subdued dwelling price performance for this year," he noted in the report.

Homes outside the major cities actually recorded a fall in value, dipping 0.2 per cent, and are up a much more modest 5.8 per cent over the past year.

Christopher Joye says this is a result of supply and demand factors.

"The demand for homes is stronger in the major conurbations whereas the supply of new dwellings has been weak," he added.

"In comparison, the smaller metro and regional markets have relatively less demand combined with much more elastic housing supply."

The Canberra home value index increased the most over the past three months, rising 3.7 per cent, while the Perth index slipped 2.1 per cent.

New home sales slump

The weakness in real estate has not been limited to existing dwellings, with new home sales slumping by 6.4 per cent in May.

The Housing Industry Association's report is based on a survey of Australia's major residential builders, and its chief economist Harley Dales says higher interest rates are having an impact.

"There is no sustained upward momentum in new home sales in 2010 because higher interest rates and concerns over the threat of further rate hikes are dampening demand," he noted in the report.

"Meanwhile, supply side obstacles, including a lack of affordable land and tight credit availability for residential development, are weighing down considerably on the new home building sector."

Detached home sales increased 13.6 per cent in New South Wales and 2.1 per cent in South Australia, but fell 8.5 per cent in Victoria, 12.3 per cent in Queensland and 10.7 per cent in Western Australia.

All aboard the property gains express,

Next stop by Chrismass -10%

The train may be delayed (for the next 10 years) but purchase your tickets now!

[blue skies]

We are still in the eye of the GFC storm: Gottliebsen

Wednesday, 30 June 2010 09:31

Robert Gottliebsen

Despite a late US Dow index rally, last night was among the more serious sharemarket falls we have experienced since global financial crisis plunged markets in 2009.

We are well above the dismally low levels witnessed on equities markets during the crisis, but last night you could see fear in almost every corner of the world. The forces that are behind each of the fears are probably manageable, but when they occur together, as what happened last night, they triggered waves of selling, including a savaging of the Australian dollar.

And of course Gillard's mining tax dithering is rekindling global doubts about the sovereign risk of this country which threatens to put Australia and our high house prices in the eye of the storm.

And for most Australians, the global wave of selling will be reflected in our share prices levels at June 30, which means that the value of superannuation funds will be hit on balance day. Many retirees will have their income reduced for the year ahead.

Let's look at some of the fears that are plaguing the markets. This sell-off started yesterday in China, and initially the analysts claimed that it was merely the institutions raising money for the $US20 billion Agricultural Bank of China initial public offering. It may have been partly that, but the fall in China's sharemarkets also reflected the fact that China's Conference Board corrected its growth index for China from a rise of 1.7% to just 0.3%.

Clearly China is slowing much more rapidly than expected, and as a result the bad property loans that are in its banking portfolios will weigh down future growth.

In the past China has always managed these issues and I think it will do it again, but the markets fear there will be much more pain than had been anticipated.

Meanwhile, in Europe the big banks have been playing the stupid game of borrowing from depositors and then investing in the sovereign debts of European countries that can't pay.

Tomorrow the banks are supposed to repay €442 billion in emergency loans but they almost certainly will have to be bailed out again. Fears of bank collapses are rife. On top of this dire outlook, Europe's austerity measures will bring on recessions in countries ranging from Greece to the UK which will make it even harder for the banks. And the strikes in Greece will be repeated in many countries, which could make the spending cuts impossible to deliver.

In the US they are helped because in a crisis money flows to the world currency, so the US dollar rises. Nevertheless, there are still chronic housing problems so consumer confidence is depressed and the US economy is still living on the old stimulus packages. Accordingly Wall Street's earnings estimates look too optimistic.

And finally the falls in the markets are triggering selling from chart-based investors which multiplies the fear and concern.

Allaying all of these fears will require a lot of work on the behalf of Europe, China and the US.

And of course when it comes to Australia, we must face the fact that our enormous level of overseas bank borrowing is going to be difficult to sustain at current interest rates. As I keep pointing out, Australian debt, including bank debt, is in a similar range to Italy and not far behind Spain when related to GDP.

If Gillard bungles the mining tax issue in this global environment then, the blow to Australia's sharemarket and the impact on the cost of Australian bank overseas borrowing will be severe. In turn, this will hit house prices.

Let's hope someone on cabinet looks at what is happening in the rest of the world. The latest opinion poll from Morgan shows voters are wary of Julia Gillard and clearly fear she will not understand the danger the mining tax poses to our global sovereign risk rating and our house prices given the current fear in the world.

[blue skies]

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

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

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

I would say that once again you are wrong.

[blue skies]

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

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

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

New tax even more of a super profits tax

SYDNEY, July 2 AAP

July 02 2010, 2:45PM

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

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

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

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

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

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

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

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

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

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

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

On the other hand it will rake in less tax.

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

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

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

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

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

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

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

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

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

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

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

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