Saturday, May 22, 2010

Anecdotal, but…..

Global Bust II - Perfect Storm for Australia; How Safe is Australia's Banking System?

For many years Australia has sought "services exports" through attracting overseas full fee paying students to come and live and study in Australia. Many tens of thousands have done so, especially from China. Over the same period, Australia developed huge housing bubble. These two factors came together at the end of 2008, when the Australian Government, fearful of the implications of a collapsing property market, relaxed restrictions on overseas students purchasing Australian residential property. The inevitable happened. Chinese families with a child studying in Australia (i.e. the newly monied Chinese) went into the market with their ears back. Demand and prices at the top end in Sydney and Melbourne went through the roof. Finally, three weeks ago, the Australian Government responded...

Posted by drewster @ 01:59 AM (1711 views)
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5 thoughts on “Anecdotal, but…..

  • Interesting article about the property bubble in Australia.It seems that the government is trying to slow down the economy by putting up interest rates.Their actions may cause the property bubble to burst as a result.The problem is that governments are either doing nothing or intervening by raising rates. Either way if the property bubble has to happen, it will.With globalisation, it is impossible for countries nowadays to have any form of effective control on their economies.
    To be effective in curbing demand, you would have to close your borders, inpose currency controls and the likes.Impossible to achieve today.

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  • Yes, we may all think Brown deserves a kicking for his handling of the economy, and he certainly does, but when the Americans lowered interest rates to 1% following 9/11 and the tech stock bust, the rest of the world had to follow into the mire to a lesser or greater extent.

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  • why?…….brown didn’t need to do anything like that….anyone who thinks he needed to do that has been brainwashed into believing it

    boe/brown should have stopped banks lending more than they had and deposit and raised interest rates to stop a housing bubble

    There is no reason why they could not have done this

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  • So many ‘Perfect storms’ about these days. I’m beginning to think the storms are ordinary and that the problem lies with trying to keep the same leaky old boats afloat.

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  • Wrt 2: d’oh “the rest of the world had to follow”

    If you but listen: there are many Americans who blame Gordon Brown for de-regulating the city which “forced” the US government to follow suit and repeal their Glass Steagall Act (with all the unintended consequences that brought).

    This globalized world is all well and good but those who are too clever for their own good will drag the rest of us off the financial cliff in their search for competitive advantage and control of the markets.

    King Canute absolutely KNEW he could not order the sea back. By contrast too many national leaders and central banks imagine they can control and manage the markets. Market manipulation has lead directly to absurdly low interest rates and a mentality of “I can afford the payments for now so the debt isn’t a problem” and upward spiralling asset prices.

    All of which creates a higher and higher centre of gravity until things topple. If the system is continental and global then the toppling may also be continental and global.

    Until this zeitgeist of market management and control has run its devastating course … we are all stuffed.

    Protectionist policies on a national and continental basis will be among the first sign of moves in the zeitgeist.

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