# Picking the end of the GFC



## marklar (5 December 2009)

What signs are we likely to see that might signal an end to the Global Financial Crisis?  Here's my 

Today I was in an Audi dealership circling an $80k car for 25 minutes, I'd told them earlier in the week that I'd be in this morning to take a look at it & discuss numbers, but nobody was interested in talking to me, so I left.  Obviously Audi Australia is doing just fine now.

Calls from Real Estate agents have changed from 'we've got this property you might like to buy' into 'would you like to sell?', and this is not just one RE agent, it's been quite a few.

Tradies are getting harder to get hold of for small jobs & my Travel Agent is run off her feet.

Does this mean it's almost over?


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## dutchie (5 December 2009)

The fireworks to herald in 2015.


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## Nyden (5 December 2009)

What GFC? 

I've personally not noticed one iota of difference here in Australia. Other than what's been happening in the market. So, as far as I'm concerned - it's long over, if it was even here at all.


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## Wysiwyg (5 December 2009)

marklar said:


> Today I was in an Audi dealership circling an $80k car for 25 minutes*, I'd told them earlier in the week that I'd be in this morning to take a look at it & discuss numbers, but nobody was interested in talking **to me, so I left.*  Obviously Audi Australia is doing just fine now.



The clothes you wear into the dealership are all important. If you wore black Stubbies' shorts, singlet, thongs and terry toweling hat then this would have indicated you weren't at all serious about buying an Audi.

In regards to the recent turmoil in share markets and the jobs front (GFC), well I have felt there was more to come. Like another less volatile implosion. So far these feelings have not unfolded.


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## Julia (5 December 2009)

Re a dealer judging the financial circumstances of a potential buyer on their dress, I disagree entirely.  Any car salesman who does this will lose many good sales.

I've known plenty of very wealthy people who dress well and truly down if they're not at work, and at the other end of the scale, wannabes who have the slick clothes and no cash.

It's like any other form of packaging - it means nothing.


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## tronic72 (6 December 2009)

Interesting post. 

I was about to post on the GFC, but with a different theme. 

My theory is we haven't had ours in Australia yet because we've been injecting billions of extra dollars into the economy.

We haven't had the property drop like the UK and US or the loss of jobs. My theory is that we are in an artificial state which will cripple the country long term, for the sake of sparing some short term pain.

Personally I'm looking at buying property in the US!

I don't think we've have had a GFC in Australia yet. We've all pigged out but haven't picked up the tab yet! When Labour finally looses power, we will see  how things REALLY are.


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## Nyden (6 December 2009)

tronic72 said:


> Interesting post.
> 
> I was about to post on the GFC, but with a different theme.
> 
> ...




What tab? Seriously, I believe that our stimulus has nearly been irrelevant. It was just fortunate that we were in *excellent* shape going into this thing; and we're still in fantastic shape coming out of it  It was also fortunate that commodities started picking up steam again.

The fundamentals that caused all of these crashes in other countries *do not exist* in Australia. They had an oversupply of houses, lower interest rates, and the ability to turn in the keys and walk away from their home - with zero debt.

Anyone still waiting for the 'big crash' here in Australia is going to look quite the fool in a few years, in my opinion.


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## joeyr46 (6 December 2009)

Nyden said:


> What tab? Seriously, I believe that our stimulus has nearly been irrelevant. It was just fortunate that we were in *excellent* shape going into this thing; and we're still in fantastic shape coming out of it  It was also fortunate that commodities started picking up steam again.
> 
> The fundamentals that caused all of these crashes in other countries *do not exist* in Australia. They had an oversupply of houses, lower interest rates, and the ability to turn in the keys and walk away from their home - with zero debt.
> 
> Anyone still waiting for the 'big crash' here in Australia is going to look quite the fool in a few years, in my opinion.




The tab is debt always has been and always will be We are not in great shape but like someone else said we have not yet raelly begun to pay debt I read only yesterday that 80% of the funds are banks lend are borrowed from overseas (cannot say whether this is correct ) but if it is now that our dollar has turned down regardless of interest rates being reasonably higher than most countries if this turns into a full downtrend watch the liquidity dry up and our market fall including houses. Although I don't expect it to get as bad as US or UK for some of the reasons you cited above. However I must be the only one that beleives there is no shortage of houses. Our population has gone from 16m approx in 1970 to 22m today but there is at least double the number of houses since then IMHO


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## Naked shorts (6 December 2009)

It was over when Goldman Sachs released far better then expected earnings back in April.


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## Nyden (6 December 2009)

joeyr46 said:


> The tab is debt always has been and always will be We are not in great shape but like someone else said we have not yet raelly begun to pay debt I read only yesterday that 80% of the funds are banks lend are borrowed from overseas (cannot say whether this is correct ) but if it is now that our dollar has turned down regardless of interest rates being reasonably higher than most countries if this turns into a full downtrend watch the liquidity dry up and our market fall including houses. Although I don't expect it to get as bad as US or UK for some of the reasons you cited above. However I must be the only one that beleives there is no shortage of houses. Our population has gone from 16m approx in 1970 to 22m today but there is at least double the number of houses since then IMHO




Sorry, but I can hardly understand what you're trying to say.

However, in response to the parts I am able to comprehend - I'll say this. Pish Posh.


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## DocK (6 December 2009)

marklar said:


> What signs are we likely to see that might signal an end to the Global Financial Crisis?  Here's my
> 
> Today I was in an Audi dealership circling an $80k car for 25 minutes, I'd told them earlier in the week that I'd be in this morning to take a look at it & discuss numbers, but nobody was interested in talking to me, so I left.  Obviously Audi Australia is doing just fine now.
> 
> ...







Julia said:


> Re a dealer judging the financial circumstances of a potential buyer on their dress, I disagree entirely.  Any car salesman who does this will lose many good sales.
> 
> I've known plenty of very wealthy people who dress well and truly down if they're not at work, and at the other end of the scale, wannabes who have the slick clothes and no cash.
> 
> It's like any other form of packaging - it means nothing.




What a coincidence!  Husband and I have spent the last few weekends researching my next vehicle, and took three for test drives.  Despite making it clear to the various salesmen we spoke to that we intended placing a definite order this month, not one of them bothered to make a follow-up phone call.  The Toyota salesman more or less assured himself of losing a sale when he asked me if I would be "bringing someone with me" when I called to arrange an appointment for a test drive - as obviously a woman on her own would have no idea what car she wanted for herself even though she's been driving for 28 years! I'm quite sure he wouldn't have asked my husband the same question had he phoned!  Having made a decision, we phoned the salesman from the dealership of choice to make an appointment to come in and nut out the price - only to have him take 2 hours to return the call and then sound quite disinterested about the whole affair!  Obviously cars must be selling themselves lately and the salesmen seem to think no effort is required.  We did purchase a car, from a rival dealership that was happy to do a good deal, and didn't even have to spend any time "selling" it to us.  Although the car only cost approx $50K, I would think it would still be worth a salesman at least making a call to follow-up on, but none of them could seem to be bothered!  If I were their boss I'd be kicking backsides to hell and back.

I do often wonder if we'd get better service if we dressed a little flasher.  We tend to stick to casual attire on weekends, and I'm not one for flashy jewellery etc - but I often find that salesmen will automatically direct us to the cheaper end of whatever we're shopping for until we specify exactly what we're looking for  I must try getting out the glitter, slapping on the Sunday best, trowelling on the make-up and giving the hubbie make-over before we next venture out with the wallet unlocked - just to see if we're treated differently



Nyden said:


> What GFC?
> 
> I've personally not noticed one iota of difference here in Australia. Other than what's been happening in the market. So, as far as I'm concerned - it's long over, if it was even here at all.




We're self-employed in an industry that services boat-builders, cabinetmakers, shopfitters etc - and we definitely did notice a difference!  Fortunately things have improved significantly over the past few months, but business was a lot slower for a while - as it was for a lot of our customers.   I guess it depends to a large extent on what industry you're involved in.  Public servants (teachers, police, nurses etc) unlikely to be affected if secure in employment - and many that I know benefitted from lower mortgage interest rates and various government stimulii.  Quite a few self-funded retirees probably had to trim the budget due to lower interest rates on term deposits (my mother is much happier now that rates are increasing).  Personally, I hope that it is long over - but I guess only time will tell for sure....


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## Garpal Gumnut (6 December 2009)

September 5th 2016.

gg


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## ROE (6 December 2009)

marklar said:


> What signs are we likely to see that might signal an end to the Global Financial Crisis?  Here's my
> 
> Today I was in an Audi dealership circling an $80k car for 25 minutes, I'd told them earlier in the week that I'd be in this morning to take a look at it & discuss numbers, but nobody was interested in talking to me, so I left.  Obviously Audi Australia is doing just fine now.
> 
> ...




50% Capital Investment for small business owner is what driven cars sales ..it ends 31 December 

I ring the car dealer one morning 2 hours later I fax over order a new car


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## Sean K (6 December 2009)

Garpal Gumnut said:


> September 5th 2016.
> 
> gg



I agree.


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## joeyr46 (6 December 2009)

Nyden said:


> Sorry, but I can hardly understand what you're trying to say.
> 
> However, in response to the parts I am able to comprehend - I'll say this. Pish Posh.




which parts could you comprehend


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## Julia (6 December 2009)

tronic72 said:


> I
> My theory is we haven't had ours in Australia yet because we've been injecting billions of extra dollars into the economy.
> 
> We haven't had the property drop like the UK and US or the loss of jobs. My theory is that we are in an artificial state which will cripple the country long term, for the sake of sparing some short term pain.
> ...



I agree.  The stimulus in Australia was designed as much to allow Rudd & Co to be able to say we had not technically had a recession, and thus advance Mr Rudd's cred on the world stage.  The fact that the huge borrowings will have to be paid for was irrelevant to them.





Nyden said:


> What tab?



What tab???  The massive debt to be paid off in the future Nyden, that's what tab. 



> The fundamentals that caused all of these crashes in other countries *do not exist* in Australia. They had an oversupply of houses, lower interest rates, and the ability to turn in the keys and walk away from their home - with zero debt.



Yep, quite true.  Thus it could be argued that there was no need for the Australian government to indulge in such a massive spend up.  Possibly the interest rate adjustments would have been enough.



Nyden said:


> Sorry, but I can hardly understand what you're trying to say.
> 
> However, in response to the parts I am able to comprehend - I'll say this. Pish Posh.



That's a bit rude, isn't it.  I had no trouble understanding the post in question.




DocK said:


> What a coincidence!  Husband and I have spent the last few weekends researching my next vehicle, and took three for test drives.  Despite making it clear to the various salesmen we spoke to that we intended placing a definite order this month, not one of them bothered to make a follow-up phone call.  The Toyota salesman more or less assured himself of losing a sale when he asked me if I would be "bringing someone with me" when I called to arrange an appointment for a test drive - as obviously a woman on her own would have no idea what car she wanted for herself even though she's been driving for 28 years! I'm quite sure he wouldn't have asked my husband the same question had he phoned!  Having made a decision, we phoned the salesman from the dealership of choice to make an appointment to come in and nut out the price - only to have him take 2 hours to return the call and then sound quite disinterested about the whole affair!  Obviously cars must be selling themselves lately and the salesmen seem to think no effort is required.  We did purchase a car, from a rival dealership that was happy to do a good deal, and didn't even have to spend any time "selling" it to us.  Although the car only cost approx $50K, I would think it would still be worth a salesman at least making a call to follow-up on, but none of them could seem to be bothered!  If I were their boss I'd be kicking backsides to hell and back.



Well, DocK, I'd suggest you contact the CEO of those companies and let them know.  They will appreciate it.
I had a similar experience many years ago when choosing my new company car.  Went in wearing casual clothes on a day off and was also directed to the cheaper model.  Walked out and phoned the CEO of the company.  Never saw that salesman there again.


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## alphaman (7 December 2009)

Julia said:


> Went in wearing casual clothes on a day off and was also directed to the cheaper model.  Walked out and phoned the CEO of the company.  Never saw that salesman there again.



You told him specifically what you wanted, but he showed you a cheaper model?


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## Nyden (7 December 2009)

Julia said:


> I agree.  The stimulus in Australia was designed as much to allow Rudd & Co to be able to say we had not technically had a recession, and thus advance Mr Rudd's cred on the world stage.  The fact that the huge borrowings will have to be paid for was irrelevant to them.
> 
> 
> 
> ...






The stimulus was a mistake, and not needed at all - that much is now obvious. However, the tab is hardly worth worrying about. What is it now? 50-odd billion dollars? That really isn't too much money, and only works out to be about 6-7K per person. It's hardly crippling.

Were it not for the stimulus, of course - we would have fallen into a technical recession. However, it would have been very short lived - and the spin-master Rudd still would have still proclaimed it his victory.

Oh, and I legitimately did have difficulties in understanding Joey's post! - Mostly because I found it quite strange in the way that one point seemed to merge into the next. :


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## joeyr46 (7 December 2009)

Nyden said:


> The stimulus was a mistake, and not needed at all - that much is now obvious. However, the tab is hardly worth worrying about. What is it now? 50-odd billion dollars? That really isn't too much money, and only works out to be about 6-7K per person. It's hardly crippling.
> 
> Were it not for the stimulus, of course - we would have fallen into a technical recession. However, it would have been very short lived - and the spin-master Rudd still would have still proclaimed it his victory.
> 
> Oh, and I legitimately did have difficulties in understanding Joey's post! - Mostly because I found it quite strange in the way that one point seemed to merge into the next. :




Were did you get 50 billion from the stimulus alone was 42 billion. The debt that has to be paid is total debt all mortgages all credit cards everything. For best parts of 40 years we have paid debt by increasing the supply of money either from the printing presses (inflation) or lately loose credit, while we have had a RBA that had delusional ideas it could control the economy via interest rates. Nyden we have not had a GFC here because we are in a slightly different cycle to US (IMHO) but if I count the elliott waves correctly we should be just about were US was in 2007 again IMHO. however regardless of whether we start down the road to deflation now or next year or the one after history tells us massive credit inflation always ends in debt deflation no exceptions. So we really should pay atention to what the stockmarket is telling us as it is probably the most accurate phsychological indicator we have
Hope you can understand this post Nyden but not worried if you cant

PS Thanks for defending me Julia


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## Nyden (7 December 2009)

joeyr46 said:


> Were did you get 50 billion from the stimulus alone was 42 billion. The debt that has to be paid is total debt all mortgages all credit cards everything. For best parts of 40 years we have paid debt by increasing the supply of money either from the printing presses (inflation) or lately loose credit, while we have had a RBA that had delusional ideas it could control the economy via interest rates. Nyden we have not had a GFC here because we are in a slightly different cycle to US (IMHO) but if I count the elliott waves correctly we should be just about were US was in 2007 again IMHO. however regardless of whether we start down the road to deflation now or next year or the one after history tells us massive credit inflation always ends in debt deflation no exceptions. So we really should pay atention to what the stockmarket is telling us as it is probably the most accurate phsychological indicator we have
> Hope you can understand this post Nyden but not worried if you cant
> 
> PS Thanks for defending me Julia




People will always have debt, they always have - and always will. There is nothing at all wrong with debt Joey. If one is able to service ones debt, it can be one of the most fantastic tools in your arsenal. 

How can anything happen without debt? What are people supposed to do? Save up until age 40 before finally buying a house outright? Seems to me that the same outcome would be achieved either way - the only difference being that the individual that took out credit has been living in his house all that time, and has now paid it off anyway.

Your idea of a strong economy is one with zero debt whatsoever? No one has a credit card, a mortgage, or any lines of credit at all? Never gonna happen


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## Garpal Gumnut (7 December 2009)

kennas said:


> I agree.




If kennas says September 5th 2016, then September 5th 2016 it is.

gg


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## robots (7 December 2009)

hello,

top posting Nyden, 

most are just guessing and making it all up, the timeframe for death and destruction get pushed further and further out

paradise in Australia justs rolls on and on

thankyou
robots


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## inenigma (7 December 2009)

Garpal Gumnut said:


> September 5th 2016.
> 
> gg




Why the optimism ???


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## TOBAB (7 December 2009)

Nyden said:


> People will always have debt, they always have - and always will. There is nothing at all wrong with debt Joey. If one is able to service ones debt, it can be one of the most fantastic tools in your arsenal.
> 
> How can anything happen without debt? What are people supposed to do? Save up until age 40 before finally buying a house outright? Seems to me that the same outcome would be achieved either way - the only difference being that the individual that took out credit has been living in his house all that time, and has now paid it off anyway.
> 
> Your idea of a strong economy is one with zero debt whatsoever? No one has a credit card, a mortgage, or any lines of credit at all? Never gonna happen




Australia has been built on debt. Borrowing money can be great - how you spend it is the interesting bit. WE will head backwards very quickly unless we invest heavily in our future.


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## joeyr46 (7 December 2009)

Nyden said:


> People will always have debt, they always have - and always will. There is nothing at all wrong with debt Joey. If one is able to service ones debt, it can be one of the most fantastic tools in your arsenal.
> 
> How can anything happen without debt? What are people supposed to do? Save up until age 40 before finally buying a house outright? Seems to me that the same outcome would be achieved either way - the only difference being that the individual that took out credit has been living in his house all that time, and has now paid it off anyway.
> 
> Your idea of a strong economy is one with zero debt whatsoever? No one has a credit card, a mortgage, or any lines of credit at all? Never gonna happen




Absolutely not debt is not neccesarily bad but too much debt certainly is 
as you are aware there is good debt and bad debt but too much of either is a bad thing how to measure when it is to much. probably from a national point of view when the interest is above a certain  % of income or the debt is above a certain  percentage of GDP.
The problem occurs when we pay too much in interest which is not produc tive  so our GDP keeps going down for each dollar spent. In other words we get no real benefit from our investments.
Has Australia reached that position ? 
Well you won't hear it from the mainstream because they don't look beyond next week, but the more of our productive capacity we send overseas because we pay ourselves too much the closer to that point.So what do we still produce ? Not much if you take out mining and farming. Farming is always subject to price variation and weather whilst mining is subject to ending whether we like it or not. So how do we get our GDP up with any degree of certainty? Once we reach that point were we can no longer service debt we will go into deflation. No option! It is wrong to look at it as an individual with a job because that is not certain if the business starts struggling as is happening now unless I,m listening to the wrong signals


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## joeyr46 (7 December 2009)

robots said:


> hello,
> 
> top posting Nyden,
> 
> ...




Whose talking about death and destruction I,m only talking about natural or normal trends with  corrections only a bit bigger than most think in terms of. I've said it before 35 years of bull market deserves a bit more correction than 18 months and as PE ratios are way above average still (Media only talk about last 15-20 years and they have been abnormal under most serious measures) We should be looking at 50 to 100 years at least.Rents are way below serious measures of return would place them (normal for decades was every $16000 spent should return $40 per week ) we are way overvalued or under returned at the moment. We can always say things are different this time. Trouble is things have a way of getting back to long term average


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## joeyr46 (7 December 2009)

Also more real millionares will be made in the next few years if we go by history not just bull market millionares real wealth businesses etc IMHO


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## TOBAB (8 December 2009)

joeyr46 said:


> normal for decades was every $16000 spent should return $40 per week




mate that's a 13% return! Which decades?


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## joeyr46 (8 December 2009)

TOBAB said:


> mate that's a 13% return! Which decades?




You've got the same calculator as me 
30's to late 60's and no it is not a 13% return most investments take off costs before working out return
Costs are Rates, Insurance, maintenance and lost rent when empty plus advertising for new tenants (real estate costs) legal costs , Labour to collect rent (or is your time worthless)real estates have been advertising gross return but thats not a real return for the investment and yes in recent years there has certainly been capital gains but that is a bonus not the investment return (or a loss of value in our currency  plus some capital gains)So it certainly has been a great investment but not for the "right" reasons. The question remains How long can this go on? I don't know but not indefinitely I feel


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## tronic72 (8 December 2009)

DocK said:


> We're self-employed in an industry that services boat-builders, cabinetmakers, shopfitters etc - and we definitely did notice a difference!  Fortunately things have improved significantly over the past few months, but business was a lot slower for a while - as it was for a lot of our customers.   I guess it depends to a large extent on what industry you're involved in.




You've made a good point. You run a business. Many of my associates who run businesses have noticed a steep decline in business. One in particular employs over 100 staff in the building industry. He's preparing for the worst!

Many are trying to avoid redundancies by forcing staff to work 4 or less days a week. This is WITH Rudds billions of dollars injected into the economy. When this starts to dry up, those businesses will have no choice but to get rid of those employees. With most families dependent on 2 incomes, the lost of that job, in this climate could easily tip us over the edge.


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## beachlife (9 December 2009)

The demographers say the decline is only just begining and the bottom will be around 2025.  It wont be a quick crash like we just had, just a steady decline.  see www.thegreatbustahead.com

Here's why, 

Due to an aging population America will slow and stop buying stuff from China, China will in turn slow and stop buying our ore, and we will be in the proverbial because our leaders are too focused on 'dig it up and ship it out'.

On top of this China also has a demographic problem caused by the 1 child policy.

Going to be interesting.....and hard to trade!


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## GumbyLearner (9 December 2009)

beachlife said:


> The demographers say the decline is only just begining and the bottom will be around 2025.  It wont be a quick crash like we just had, just a steady decline.  see www.thegreatbustahead.com
> 
> Here's why,
> 
> ...




China is going great guns at present! Can they maintain this growth?That's the key question movie watchers?


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## beachlife (9 December 2009)

GumbyLearner said:


> China is going great guns at present! Can they maintain this growth?That's the key question movie watchers?




Are they ?

There was a documentry on the ABC a couple of weeks ago that said when the GFC hit, China's unemployment hit around 10 million, factories closed and they were so desperate to get trade going that they would send a shipping container to Europe for free...and they had huge stockpiles of ore.

Personally I dont buy into their propaganda machine and dont believe they are going as strong as they say....I could be wrong though.


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## Taltan (9 December 2009)

joeyr46 great post earlier on credit creation and debt deflation.

Regarding China its very difficult for us outsiders to know how much of their economic miracle is real and what is fictious. I don't think even they know as the figures on the ground aren't reliable. So it makes predictions very difficult. Certainly if China & India keep growing and another 2bn western consumers are added (forgetting global warming for a sec) we will be very prospourous going forward and those with the highest level of gearing i.e. debt will do well. 

However leaving it to the Western economies of the last 30 years, based on their demographics and debt levels joeyr46 is right, there will be debt deflation. China is the great unknown


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## alphaman (9 December 2009)

Debt is OK, as long as it is fairly priced. Problem is cheap debt.


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