# Who thinks there will be a slump?



## sptrawler (5 April 2011)

Who thinks there will be a major correction. The U.S market is being proped up by free money at 0% interest, that is being pumped into an economy that has zero house growth and their manufacturing is competing against China. The U.S stock market has gone up 100% since the GFC but their currency has dropped heaps.  The U.S dollar is the underpinning currency i.e they have to stop printing it eventually or people will lose confidence in it. Then the free money won't be pumping up ailing companies. 
When this happens the correction has to happen, otherwise mahem happens with currencies. I am no economist, but you just can't keep printing money or why am I going to work?


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## GumbyLearner (5 April 2011)

*Re: who thinks a slump*

For what specifically?


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## sptrawler (5 April 2011)

*Re: who thinks a slump*

The replies will answer that


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## jbocker (5 April 2011)

sptrawler said:


> Who thinks there will be a major correction. The U.S market is being proped up by free money at 0% interest, that is being pumped into an economy that has zero house growth and their manufacturing is competing against China. The U.S stock market has gone up 100% since the GFC but their currency has dropped heaps.  The U.S dollar is the underpinning currency i.e they have to stop printing it eventually or people will lose confidence in it. Then the free money won't be pumping up ailing companies.
> When this happens the correction has to happen, otherwise mahem happens with currencies. I am no economist, but you just can't keep printing money or why am I going to work?





Alan Greenspan does ...


*Uncle Sam heading closer to a fresh financial meltdown *

from the article today, "_The man who brought us the global financial crisis, Alan Greenspan, has spoken out on how to fix the system. Of all the advice he might give, he has given the most unexpected. In essence, he has said: "Don't even try." ...._"

http://www.smh.com.au/opinion/polit...-fresh-financial-meltdown-20110404-1cyil.html


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## Julia (5 April 2011)

Sptrawler, you have left out the bankrupt nations in Europe, the horrible mess in Japan, and the brawl right here over the carbon tax.

I've been pondering this for some time now, but markets everywhere seem to be ignoring these fundamentals and - perhaps in a state of collective denial - just going ahead anyway.

It seems even that there has come to be an acceptance that governments everywhere will do whatever it takes, no matter how full of moral hazard and irresponsibility this might be, to prop the system up.

Another factor in Australia is that probably interest rates have peaked for quite a while (banks are finding it much easier to access money) so those who have sat out in cash are starting to reconsider their options, given the apparently rising market.

I don't know.  Just thoughts which might be quite incorrect.


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## sptrawler (5 April 2011)

Well Julia, like you I think the upward ever upward idea has fundamental flaws. I have taken a lot of gains out. Also think a storm may be brewing


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## GumbyLearner (5 April 2011)

jbocker said:


> Alan Greenspan does ...
> 
> 
> *Uncle Sam heading closer to a fresh financial meltdown *
> ...




But wasn't Greenspan a lover of Ayn Rand. The market should be free and unhindered and be able to govern itself...

Lucky I bought some bullion! phew Prior to the Bush/Obama bailout of the "strength" within the free market. LOL

Not to mention the Goldman Sux crew still in charge. God help Australia if Turntable (Turnbull) every runs the country. He would be far worse than any UN obsequious pleb like Krudd.


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## sptrawler (5 April 2011)

By the way where have they moved us. Obviously they dont like the mention of a correction , but isn't that what forums are about, people floating their ideas and having them knocked around


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## Tanaka (5 April 2011)

Julia said:


> It seems even that there has come to be an acceptance that governments everywhere will do whatever it takes, no matter how full of moral hazard and irresponsibility this might be, to prop the system up.




Yep, the system cried for a lollipop and mummy gave it one during GFC. The system has nothing to fear knowing that it can always stamp its feet and throw a temper tantrum every time it needs something.
:bowdown::swear:


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## GumbyLearner (5 April 2011)

Tanaka said:


> Yep, the system cried for a lollipop and mummy gave it one during GFC. The system has nothing to fear knowing that it can always stamp its feet and throw a temper tantrum every time it needs something.
> :bowdown::swear:




like a bailout


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## sptrawler (6 April 2011)

Well Gumby learner, I tend to think the Australian public is feeling the way I do, savings up borrowings down, new home starts down, home loans generaly at a serious low. The problem is even the plebs have a lot more info available to them so they now know China had a trade defecit last quarter. So now they have to fund the infrastructure build from their money instead of U.S dollars. If they have a trade defecit next quarter lets see what happens to commodities.


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## Uncle Festivus (7 April 2011)

I don't think there will be a slump - I think there will be a complete collapse!

Only the timing is unknown?


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## joea (7 April 2011)

"A new form of inflation is increasingly described in the blogosphere.
It better explains the pricing paradox Mr. Bernanke has failed to embrace.
It's called "biflation".

Everything you already own - a house, a car, a stock portfolio - has rapidly
declined in value. Everything you actually need to buy - food, gasoline, medicine, education - is going up."

DJ Newswires  Al Lewis.

Colin Twiggs attached  this to his Trading Diary. I thought it was very appropiate.


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## sptrawler (7 April 2011)

The other issue is the plebs think wow the Dow has doubled, but that is on the back of cheap money(quantative easing- money printing) and has to be weighed up against devalued currency. The reality is the dow has doubled, but against most currencies the $U.S has dropped a lot, therefore I would think the next reporting season would have to see these companies report increased profits to support the higher share prices. That is devalued currency should equate to more exports, if this doesn't happen the share price surge should retract. Well thats what this pleb thinks.


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## robusta (7 April 2011)

I can say without a doubt there is sure to be a slump, there is also going to be a boom. The timing and order of these are in doubt however. My plan is to take advantage of either event.


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## thesnowyforest (8 April 2011)

based on industry reports there could be a slump mid year whilst the world/markets realise the world is not going to end come the end of QE2, there will be no QE3 as the US is improving and then,......The mother of all Rallies in the last 4 months of the year.


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## lookout (8 April 2011)

If demand is pulled forward there has to be a future slump in line with reduced disposable income. I think the graphs at this link describe our future; volatility within a downward trend:  http://dshort.com/articles/2010/mega-bear-2000.html


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## konkon (8 April 2011)

sptrawler said:


> Who thinks there will be a major correction. The U.S market is being proped up by free money at 0% interest, that is being pumped into an economy that has zero house growth and their manufacturing is competing against China. The U.S stock market has gone up 100% since the GFC but their currency has dropped heaps.  The U.S dollar is the underpinning currency i.e they have to stop printing it eventually or people will lose confidence in it. Then the free money won't be pumping up ailing companies.
> When this happens the correction has to happen, otherwise mahem happens with currencies. I am no economist, but you just can't keep printing money or why am I going to work?




As long as the Federal Reserve in the US keeps adopting a quantitative easing approach or something equivalent, there will NOT be a major correction. This is over the next six to twelve months; even longer if the Fed keeps stimulating the economy, and it has to. 

The Fed has to keep stimulating the 'Wall Street' economy. If it stops quantitative easing and just gives up on stimulating the economy, then you can expect the VIX to rise and for there to be more volatility; which, given where we are, would mean the Dow etc will fall a fair bit!

The US dollar is a concern at the moment. If it keeps correcting and has no floor, then expect all stock markets around the world to crash, even without consumer money like in 2008. My guess is if the Fed keeps easing like it has been, then this will delay and maybe even prevent a crash of the USD and stock markets. I think the Fed is kind of buying time and hoping for better times, in the real economy - which will happen.

Well, keep working and save if you can.


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## operandi (8 April 2011)

IMO.... Fed owns all those lovely assets, they need to sell em to get "flat" and make a buck. How do u get asset prices up? Inflation, how do u get inflation? higher prices of "stuff" like food or oil. So lets push oil up or even better take the oil from the world and sell it on. How and where do markets price inflation. Bond futures prices. Quantitative easing is old hat, manufactured inflation is the new "black".


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## explod (24 May 2011)

And meanwhile back in our own little backyard.

Out shopping with the bride this morning and talking to a fellow with a business in the Frankston central shopping centre.  Stated:

His business is down 30% in the last two weeks, many of his nearby associates reporting similar, but then he confided, "if this shopping centre called for all the tenants to pay back rent half the shops would be shut."

If there is an interest rate rise he said, we have had it.


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## Knobby22 (24 May 2011)

Retail is dying.
I have heard of a few tenants demanding and getting lower rents.

Its the internet!! Also Australian rents and margins being too high.

We will be in adjustment mode and there will be many winners and losers.

The gov'mint and Her Majesty's opposition don't have any answers.


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## VSntchr (24 May 2011)

Seems an odd situation..I dont have much knowledge or experience to be commenting here...but my take on the situation is that people who have small businesses (retail etc) are struggling hardcore...
People with debt are also struggling as they were silly enough not to consider rates abnormally low when they took out their funding a few years back...

However, it seems that the saving rate is high...meaning that there is a whole heap of people..with a fairly large amount of savings..and that number should be growing?...

A lot of people are still too scared to invest in the stockmarket since they got burned through the GFC...so where are they parking all this money!


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## skc (24 May 2011)

explod said:


> And meanwhile back in our own little backyard.
> 
> Out shopping with the bride this morning and talking to a fellow with a business in the Frankston central shopping centre.  Stated:
> 
> ...




Why last 2 weeks? Sure the market has been falling, but the average bloke on the street doesn't know what the sharemarket is doing in the last 2 weeks.

Is there any other reason that might explain the slump? E.g. colder weather, rain, nearby roadworks, parking changes?


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## skyQuake (24 May 2011)

skc said:


> Why last 2 weeks? Sure the market has been falling, but the average bloke on the street doesn't know what the sharemarket is doing in the last 2 weeks.
> 
> Is there any other reason that might explain the slump? E.g. colder weather, rain, nearby roadworks, parking changes?




All the long only fund managers holding our market up were taken away in the rapture


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## prawn_86 (24 May 2011)

I have about 200 SMEs as clients. Most are reporting that business at the moment is slow, which means average to slightly below average.

Very few are on the bread line at the moment, but conversely very few are having exceptional results, i can think of only 3 clients that are reporting better sales than this time last year.  This is spread across pretty much every industry i deal in which ranges from food and bev through to construction.


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## explod (24 May 2011)

skc said:


> Why last 2 weeks? Sure the market has been falling, but the average bloke on the street doesn't know what the sharemarket is doing in the last 2 weeks.
> 
> Is there any other reason that might explain the slump? E.g. colder weather, rain, nearby roadworks, parking changes?




Dont' know, he did quote figures *down* over the last several months but as it was in conversation do not recall detail more than stated.   He himself (a newsagent) is end career and well enough off but felt we are in for times that we both agreed we have not experienced in our lifetime.

Time will tell of course so take it as you wish.


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## markhocky (24 May 2011)

VSntchr said:


> ...
> 
> However, it seems that the saving rate is high...meaning that there is a whole heap of people..with a fairly large amount of savings..and that number should be growing?...




A high savings rate doesn't necessarily mean there is spare cash lying around. The additional savings could be going towards paying down debt (which is more likely I believe).

The other conspiring factors of increased 'real' inflation, and lower wage growth, probably also mean there is less spare cash being scooped away each month ready to pounce on a correction.

Just my thinking, anyways...


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## tothemax6 (24 May 2011)

Knobby22 said:


> Retail is dying.
> I have heard of a few tenants demanding and getting lower rents.
> Its the internet!! Also Australian rents and margins being too high.
> We will be in adjustment mode and there will be many winners and losers.
> The gov'mint and Her Majesty's opposition don't have any answers.



That'd be nice, deflation in the real estate market.


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## skc (24 May 2011)

explod said:


> Dont' know, he did quote figures *down* over the last several months but as it was in conversation do not recall detail more than stated.   He himself (a newsagent) is end career and well enough off but felt we are in for times that we both agreed we have not experienced in our lifetime.
> 
> Time will tell of course so take it as you wish.




I understand. Just that the 2 week timeframe seemed specific (and short) so I just tried to think of other factors. Clearly you didn't do an accountant's audit on his business . 



skyQuake said:


> All the long only fund managers holding our market up were taken away in the rapture




Lol. The rapture was only last Sat... so those fund managers went somewhere, but it wasn't heaven.


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## Julia (24 May 2011)

VSntchr said:


> However, it seems that the saving rate is high...meaning that there is a whole heap of people..with a fairly large amount of savings..and that number should be growing?...
> 
> A lot of people are still too scared to invest in the stockmarket since they got burned through the GFC...so where are they parking all this money!



Presumably much it is being parked in online savings accounts, yield from which is lower than it was a couple of years ago.  Ditto term deposits.  About 18 months ago you could easily get 8% on a term deposit, now it's closer to 6%.  Why would rates have so dropped if banks were not feeling pretty flush with local deposit funds?

I support the observation that retail is suffering badly.  It might be better in the big cities, but in this town of around 55,000 the CBD is dead and retailers, when asked, concede they are doing very badly.


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## explod (24 May 2011)

skc said:


> I understand. Just that the 2 week timeframe seemed specific (and short) so I just tried to think of other factors. Clearly you didn't do an accountant's audit on his business .
> 
> 
> 
> Lol. The rapture was only last Sat... so those fund managers went somewhere, but it wasn't heaven.




First time I had ever met the man, he spoke about the economy first when giving me change for my purchase of the Financial Review hich must have made him feel I knew something he he he., you tuned in Waynel.  So it was just an informal chat and thought I would mention it on here.


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## qldfrog (24 May 2011)

No so sure about things being better in the big cities; 
Queen Mall in center of Brisbane: go to Broadway lane and see the number of closed/for rent signs; never been that bad even when GFC hit;
we are in a recession IMHO; I am lucky, I work in resources but Queensland (and I assume most of Australia) is suffering badly;


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## So_Cynical (24 May 2011)

There is alot of empty shops and bulk retail sites...well more than there was a year ago, maybe its just taken that long for the GFC to catch up with the retailers that were always at the more marginal end of the scale...prime retail is still ok...Westfield Parramatta was full (car park always a good indicator) the other Thursday nite.


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## Glen48 (25 May 2011)

This year will be better than next year, buy USA today and what ever you read is what we can expect over the next 5 years.
 What happens in USA happens here 5 years later.


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## konkon (25 May 2011)

When, for example, some local councils are taking away gas operated outdoor heaters from cafes etc and suggesting the proprietors utilise blankets for patrons instead, then you have a real problem! A vote of 8 to 10 in favour of getting cafes to issue blankets for patrons is a vote for these small business operators to go under. Local council stupidity aside, why isn't some skillful law firm out to sue these so called representative government agencies. I'm sure there is plenty of money in the till seeing as though they have chipped away at the middle class for quite some time now. 

Just remember that councils work for us, or are meant to, and any decision to adversely affect the real backbone to Australia's economy (small business and not mining) should be met with tough counteractive measures to keep these agencies from creating extra work for themselves while small business goes under. Hold them accountable for their damaging decisions. This might get others to reexamine their position with this counter-productive carbon tax and any adverse effect it will (definitely) have on the economy. 

At the end of the day councils should not interfere too much in private industry, and if any other government agency wants to side with this local 'mob'  then how are you going to get all that funding you need and deserve if the middle class and small business goes under?

And the next time we all go off to vote, in state and federal elections, maybe we should realise this isn't a popularity contest like in Big Brother or Australian Idol. I bet this country would still run efficiently for a few months if we had no government at all but were still protected by law enforcement agencies etc.


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## skc (25 May 2011)

konkon said:


> When, for example, some local councils are taking away gas operated outdoor heaters from cafes etc and suggesting the proprietors utilise blankets for patrons instead, then you have a real problem! A vote of 8 to 10 in favour of getting cafes to issue blankets for patrons is a vote for these small business operators to go under. Local council stupidity aside, why isn't some skillful law firm out to sue these so called representative government agencies. I'm sure there is plenty of money in the till seeing as though they have chipped away at the middle class for quite some time now.




Personally I think heating of outdoor areas of restaurants etc should be illegal. 

Giving out blankets isn't the right substitute - just don't bloody sit outside if people think it's too cold!


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## VSntchr (25 May 2011)

konkon said:


> When, for example, some local councils are taking away gas operated outdoor heaters from cafes etc and suggesting the proprietors utilise blankets for patrons instead, then you have a real problem! A vote of 8 to 10 in favour of getting cafes to issue blankets for patrons is a vote for these small business operators to go under. Local council stupidity aside, why isn't some skillful law firm out to sue these so called representative government agencies. I'm sure there is plenty of money in the till seeing as though they have chipped away at the middle class for quite some time now.
> 
> Just remember that councils work for us, or are meant to, and any decision to adversely affect the real backbone to Australia's economy (small business and not mining) should be met with tough counteractive measures to keep these agencies from creating extra work for themselves while small business goes under. Hold them accountable for their damaging decisions. This might get others to reexamine their position with this counter-productive carbon tax and any adverse effect it will (definitely) have on the economy.
> 
> ...




Why take away the heaters? To reduce emissions or something? sounds redonkulous


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## sptrawler (25 May 2011)

VSntchr said:


> Seems an odd situation..I dont have much knowledge or experience to be commenting here...but my take on the situation is that people who have small businesses (retail etc) are struggling hardcore...
> People with debt are also struggling as they were silly enough not to consider rates abnormally low when they took out their funding a few years back...
> 
> However, it seems that the saving rate is high...meaning that there is a whole heap of people..with a fairly large amount of savings..and that number should be growing?...
> ...




The savings rate is high because a lot of older investors have cashed in also anyone with excess cash is paying down debt. The rest are swimming with just their nose above water and can't do anything but pray.
The funny thing is that the commentators are saying soveriegn debt issues are worrying investors. 
What a joke everyone is waiting to see if China is willing to prop up raw material prices. I believe the next 6 months are going to be make or break for the Aussie market. I'm parked in cash and may miss out on a massive surge in prices, but I can live with that.


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## Uncle Festivus (25 May 2011)

konkon said:


> At the end of the day councils should not interfere too much in private industry, and if any other government agency wants to side with this local 'mob'  then how are you going to get all that funding you need and deserve if the middle class and small business goes under?




Hmmmm......are you saying -  'don't interfere but please use ratepayers money to pay for our outdoor heaters'?? Besides the point that it just doesn't seem correct to start with ie that the council pays for it? They should not subsidise a private business full stop.



sptrawler said:


> The savings rate is high because a lot of older investors have cashed in also anyone with excess cash is paying down debt. The rest are swimming with just their nose above water and can't do anything but pray.
> The funny thing is that the commentators are saying soveriegn debt issues are worrying investors.
> What a joke everyone is waiting to see if China is willing to prop up raw material prices. I believe the next 6 months are going to be make or break for the Aussie market. I'm parked in cash and may miss out on a massive surge in prices, but I can live with that.




I'm not only cash, but short as well, have been for a while.....


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## sptrawler (25 May 2011)

Hi Uncle Festivus, I just can't believe the amount of people where I work , that have their money in high risk growth. The funny thing is they are near retirement age. I wonder if they are not being pressured to stay in high risk because the government has reduced what they can put in and lifted the age they can access the pension. Therefore they feel pressured to get high returns, this in turn can lead to high losses if the market has a downturn.
Which would support the old song "The working class can kiss my ------------I have the bosses job at last"
The labor government has lost any attachment it thought it might have with the working class.
I just hope all the lower income earners change their super over to cash and preserve what they have, at least untill this government is thrown out.


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## Julia (25 May 2011)

sptrawler said:


> I'm parked in cash and may miss out on a massive surge in prices, but I can live with that.



Me too.  Capital preservation is the main priority.



sptrawler said:


> Hi Uncle Festivus, I just can't believe the amount of people where I work , that have their money in high risk growth. The funny thing is they are near retirement age.



 Isn't this due largely to a combination of apathy/powerlessness, and belief in the advice of their financial advisers?

ABC Local Radio last night had talkback with Daryl Dixon, Super expert.
A bloke phoned in to say he had inherited a mere $250,000 and wondered whether he should start a SMSF.  He said he thought he'd find a financial adviser and essentially just turn over the whole responsibility to this person!  He was clearly financially semi-literate at best.
To the credit of Daryl Dixon he suggested such an abrogation of responsibility to a FA was fraught with danger.  He quoted Storm and the multitude of clients who did just this with well known results.

So perhaps this bloke is typical of many who may well have saved money but along the way have little idea about investing.  They are utterly ripe for the picking as far as corrupt FA's are concerned.  So if the FA suggested to such a person that their funds would be best employed in high growth managed funds, I doubt too many of these investors would even begin to question this.


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## Smurf1976 (25 May 2011)

konkon said:


> When, for example, some local councils are taking away gas operated outdoor heaters from cafes etc and suggesting the proprietors utilise blankets for patrons instead, then you have a real problem! A vote of 8 to 10 in favour of getting cafes to issue blankets for patrons is a vote for these small business operators to go under.



Are you saying that the council previously provided heating outdoors at ratepayers' expense and has now ceased doing so?

Or are you saying that council has passed some law to prevent cafes etc providing heating outdoors at private expense?


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## Smurf1976 (25 May 2011)

skc said:


> Personally I think heating of outdoor areas of restaurants etc should be illegal.
> 
> Giving out blankets isn't the right substitute - just don't bloody sit outside if people think it's too cold!



I agree that those heaters are somewhat wasteful of energy, but if we're going to ban a 10kW heater then where does that leave us with a 200+kW V8 or 4WD car? Or even a 70kW small car?

The problem isn't that someone used a bit of gas sitting outside the restaurant. It's that they used a lot more energy (petrol) to get there in the first place. If there's a case for banning outdoor heaters then there's a far stronger case for just banning restaurants either indoor or out.

It could also be pointed out that the whole purpose of outdoor dining in the first place, other than in a few places where it has long been popular due to the climate, has a lot to do with the smoking restrictions indoors. I don't smoke, but many do and that's reality.

And of course whatever isn't spent on heaters, restaurants and cars will be spent on something else instead. And that something else will use energy in some form and will pollute. 

Just leave it to business and individuals to decide what to do...


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## tothemax6 (25 May 2011)

Uncle Festivus said:


> I'm not only cash, but short as well, have been for a while.....



Can I ask what factors originally motivated the short, and also how you placed the short? Cheers!


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## sptrawler (25 May 2011)

Smurf1976 said:


> I agree that those heaters are somewhat wasteful of energy, but if we're going to ban a 10kW heater then where does that leave us with a 200+kW V8 or 4WD car? Or even a 70kW small car?
> 
> The problem isn't that someone used a bit of gas sitting outside the restaurant. It's that they used a lot more energy (petrol) to get there in the first place. If there's a case for banning outdoor heaters then there's a far stronger case for just banning restaurants either indoor or out.
> 
> ...




This dicussion should probably be in the carbon tax debate but if the government was serious about carbon reduction why wouldn't they legislate to make all vehicles diesel or l.p.g by 2015. The technology is there , the fuel outlets are available, the carbon reduction is real. The problem is the government is full of SH!!!!!!!!!!!!!!!t they are trying to repay past debts to past promisess to past pre selections.


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## sptrawler (25 May 2011)

Anyway getting back on thread I feel we are at the cusp or the knee point.


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## LifeChoices (26 May 2011)

sptrawler said:


> Anyway getting back on thread I feel we are at the cusp or the knee point.




I've been thinking about poverty stocks, and industries to be in when it all goes belly up.

Today I came up with a pretty good idea - tattoo removal

There must be thousands of people out there with bad tattoos that can only become more un fashionable as the slump kicks in. I'll get a chemist to come up with some sort of cheap acid that may burn a bit, but will remove those unwanted tribal tats in a few minutes:

"Stick your arm in the bucket son - it won't hurt too much"


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## Glen48 (26 May 2011)

Maybe cut them off and frame them and sell them on E bay  under fine art.

Only  things that you can eat, sleep in, does not need money to use  or gives shelter willl be worth some thing the rest will be worth  nothing soon


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## Intrinsic Value (26 May 2011)

I sold out 60 percent of my poftfolio last Friday.

I kept most of my FGE, MCE, and RMS bar 30 percent which i sold off.

Why did it do it?

Have been reading a lot lately of a correction and also noticed RM's fund was 85 precent cash so on the balance of what i have read and seen I thought it was prudent to keep a large chunk of cash for bargains.

Addidtionally there are a bunch of analysts still saying that the problems that surfaced through the GFC have not been addressed and that a GFC mark 2 is a certainty and only the timing fo it is in question.


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## wayneL (26 May 2011)

Over here in the shakey isles, the only thing holding us out from a technical recession is some of the export industries... timber, dairy etc.

The "mums and dads" economy is definitely in recession.


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## Uncle Festivus (27 May 2011)

tothemax6 said:


> Can I ask what factors originally motivated the short, and also how you placed the short? Cheers!




Several fundamental factors as I have detailed ad nauseum in other posts for several years plus technically as per here - 

https://www.aussiestockforums.com/forums/showthread.php?t=6395&p=632995&viewfull=1#post632995

I just use index cfd's through IG Markets (actually got lucky when they murdered Osama Bin Laden and the DOW futures spiked through 13k hitting a short order )

Keep an eye on the 3.30pm action in the DOW, or at least the last hr of trade to see where the pro's are going ie they let the Feds reflate the market only to sell or short?


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## sptrawler (30 May 2011)

wayneL said:


> Over here in the shakey isles, the only thing holding us out from a technical recession is some of the export industries... timber, dairy etc.
> 
> The "mums and dads" economy is definitely in recession.




Don't worry wayneL, we are in the same situation here, I went looking for a bedroom suite last week. 20 furniture shops later me and the better half were the only ones out there.
Got a deal on something we liked it was $3000 under what they were asking 6 months ago.


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## joea (31 May 2011)

Hi.
We have the April Building Approvals at 11.30 am, and the private sector credit growth data will be released today i think. or 
Tomorrow the March quarter GDP will be released.

Cheers


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## trainspotter (31 May 2011)

Things are so bad that the Chinese lady I bought some stuff from ebay sent me an email asking me to come back to her ebay store and buy more! Yeppers ...... we are royally screwed in retail.


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## sptrawler (9 June 2011)

Actualy trainspotter, I think parcel delivery from China is the only non resource based growth industry we have. I have never seen so many messenger post, DHL and Fed Express vans on the road.
On the 25/05 I thought we were on the turning point of a major correction. Well I think it has now begun time will tell. The continuing fall of the Dow and the removal of QE2, will make it very hard to find confidence and a support level for the Australian market.
Also it is difficult to imagine where any uplifting news will come from for the U.S. 
I guess it will be the recession we have to have when Labor are in.


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## Glen48 (9 June 2011)

Who thinks the DOW will tank and will it cause a crash ?


----------



## skyQuake (9 June 2011)

Glen48 said:


> Who thinks the DOW will tank and will it cause a crash ?




I don't think the DOW tanking itself will trigger a crash.
Too many bears around imo


----------



## joea (9 June 2011)

wayneL said:


> Over here in the shakey isles, the only thing holding us out from a technical recession is some of the export industries... timber, dairy etc.
> 
> The "mums and dads" economy is definitely in recession.




The only thing holding Australia out of a recession is WAYNE SWANN.
If you don't belive me, ask him.

Joea


----------



## sptrawler (9 June 2011)

skyQuake said:


> I don't think the DOW tanking itself will trigger a crash.
> Too many bears around imo




I'm with you, I think if the DOW takes a hit we will slide through the 4500 support then probably stop around 4200.
To go lower would take some really bad news from China. 
Like you said there are too many bears around and U.S problems are already being factored in to prices.


----------



## adobee (9 June 2011)

Im expecting bounce tomorrow .. 
if I am wrong there will be a big slide to 4200 IMO


----------



## explod (9 June 2011)

skyQuake said:


> I don't think the DOW tanking itself will trigger a crash.
> Too many bears around imo




I thank we have had the crash but only need the Dow crash to let everyone else know about it.

Benanke is finding green shoots down black six foot holes.


----------



## inenigma (9 June 2011)

Glen48 said:


> Who thinks the DOW will tank and will it cause a crash ?




More to the point....  Who doesn't think the DOW will crash ?  I would say it's more than likely.


----------



## skyQuake (9 June 2011)

inenigma said:


> More to the point....  Who doesn't think the DOW will crash ?  I would say it's more than likely.




If crash = 20% fall; I'd say dow would be sooner up 20 than down 20.


----------



## sptrawler (11 June 2011)

skyQuake said:


> If crash = 20% fall; I'd say dow would be sooner up 20 than down 20.




We are down about 10% from our recent peak another 10%will take us to 4200, thats on the back of a supposed strong economy. The U.S is down about 4% on the back of a struggling economy that is running out of tricks and ink for money printing.


----------



## Aussiejeff (11 June 2011)

sptrawler said:


> We are down about 10% from our recent peak another 10%will take us to 4200, thats on the back of a supposed strong economy. The U.S is down about 4% on the back of a struggling economy that is running out of tricks and ink for money printing.




DOW down 176 pts or almost 1.5% last night. A few more like that and the pressure will be really on for QE3


----------



## trainspotter (11 June 2011)

What? Print more money?


----------



## Glen48 (11 June 2011)

The DoW dropped again last night Big Ben us waiting for all to come back crying for QE 3 because the other two didn't work this one will


----------



## explod (11 June 2011)

Trainspotter, I only said six foot.


----------



## Aussiejeff (11 June 2011)

trainspotter said:


> What? Print more money?
> 
> View attachment 43224




O, bummer!


----------



## Glen48 (11 June 2011)

http://googleads.g.doubleclick.net/...d=94&xpc=ZWpzK2r55M&p=http://www.shtfplan.com


----------



## sptrawler (11 June 2011)

If they bring in QE3 the public will start and ask the question 
"Why put up my taxes? Why not just print more money to cover the shortfall".
"Why should my standard of living keep going down when I had nothing to do with the problem".
" If you can print money to bail out the failed banks and companies, why not print more and give me a pay rise to pay my mortage"
It's only a matter of time before confidence in the money system falters then trouble really starts.
Is there any wonder the price of gold is climbing.


----------



## sptrawler (15 June 2011)

Colarado closing down another 1000 jobs gone. The Retravision store near me is closing at the end of the month after 20years. The owner reckons it isn't worth keeping it open.
So the unemployment figures are going to start ratcheting up.
The slump appears to be gaining momentum.
Don't want to be a prophet of doom, but a recession is looking to be on the cards. I guess it's just one of those recessions you have to have when Labor are in. LOL


----------



## sptrawler (15 June 2011)

By the way I bought something in the sale, asked what the price was and what I could get it for, 90% under sticker price.

This is going to get really nasty, obviously they were having to "jack up" prices to cover their overheads.
The domino effect is going to really kick in for the immediate future and the fall out will be wide spread. 
I think there is a huge case for holding your nerve, sit on cash and watch what unfolds.
Really scary times, which requires more grey matter than Labor can muster. Maybe Labor can get Costello to help Swan out on an I.A


----------



## Glen48 (15 June 2011)

This man is worried :

http://news.yahoo.com/s/nm/20110614/bs_nm/us_usa_fed

Maybe you mean need this type of slump:

CHICAGO (AFP) – A Texas man died while raping a 77-year-old woman, local media reported.

Isabel Chavelo Gutierrez, 53, broke into the woman's rural home armed with a knife and attacked her.

But in the midst of the rape he complained he wasn't feeling well and "stopped having sex with her so he could rest," the Corpus Christi Caller reported citing the local sheriff's office.

The registered sex offender continued to fondle her, however, then rolled over and died.

The woman initially thought he had passed out drunk because she smelled alcohol on his breath. She fled her home in her car and called her daughter for help.

Investigators believe Gutierrez died of a heart attack after riding his bicycle two miles to the woman's home on a hot summer day but are awaiting the results of an autopsy.

He was on parole for sex crimes including indecency with a child in 1986 and had been released from prison in 2008.

The Refugio County Sheriff's Office was not immediately available for comment.


----------



## sptrawler (15 June 2011)

The problem is, Glen, they can't tell Greece to pull it's head in because it has overspent. Then say to the U.S it's o.k to just print money to cover its overspending, the two are mutually exclusive. BIG PROBLEM.


----------



## ajjack (15 June 2011)

@Glen48


Yeah had to laugh.  The woman later claimed in her report
"he died while having a stroke"

lol

Red kabayo


----------



## Glen48 (15 June 2011)

His nick name was Victa ...2 stroke .

Looks like China's property bubble has about as much pressure it can take and claimed to be much bigger than USA sub prime , Greece has riots, India has 9% inflation, RBA ready to raise rates, USA need to make  decision soon if it should print or not and Japan, UK, Ireland, Spain, Italy, Portugal all over their GDP limits with JAPAN X 5.
There is 100 times more Gold sold on the market than there is above ground.
 Dow on the skids for now.

Gold is predicted to double in 8 months there has to be enough bad news there to indicate a slump and more bad news soon.


----------



## cynic (16 June 2011)

Glen48 said:


> His nick name was Victa ...2 stroke .
> 
> Looks like China's property bubble has about as much pressure it can take and claimed to be much bigger than USA sub prime , Greece has riots, India has 9% inflation, RBA ready to raise rates, USA need to make  decision soon if it should print or not and Japan, UK, Ireland, Spain, Italy, Portugal all over their GDP limits with JAPAN X 5.
> There is 100 times more Gold sold on the market than there is above ground.
> ...




Glen48, you're beginning to sound like an optimist! So tell me, all optimism aside, what's your realistic assessment of the situation? 
The western economy's looking totally fornicated at the moment, wouldn't you agree?
I think coffee, chocolate, cigarettes and pharmaceuticals (such as statins, palliatives etc.) are likely to become highly tradeable in the foreseeable future. Gold whilst convenient as a trading medium, might be okay in the short term, whilst humanity's still in shock. Once they come to the harsh realisation that it doesn't directly address needs for physical survival, it will surely fall out of fashion as more urgent priorities come to the fore.


----------



## Uncle Festivus (16 June 2011)

cynic said:


> Glen48, you're beginning to sound like an optimist! So tell me, all optimism aside, what's your realistic assessment of the situation?
> The western economy's looking totally fornicated at the moment, wouldn't you agree?
> I think coffee, chocolate, cigarettes and pharmaceuticals (such as statins, palliatives etc.) are likely to become highly tradeable in the foreseeable future. Gold whilst convenient as a trading medium, might be okay in the short term, whilst humanity's still in shock. Once they come to the harsh realisation that it doesn't directly address needs for physical survival, it will surely fall out of fashion as more urgent priorities come to the fore.




You will still need a medium for value exchange ie have something that somebody else knows has value thet they can also use as a medium for value exchange? If things go the way I think they will go, you won't be able to get cash from the bank (bank runs), so cash will be useful? So, small denomination gold, cash  storable foodstuffs, any medicines, and unfortunately something to defend yourself with??


----------



## Aussiejeff (16 June 2011)

Uncle Festivus said:


> You will still need a medium for value exchange ie have something that somebody else knows has value thet they can also use as a medium for value exchange? If things go the way I think they will go, you won't be able to get cash from the bank (bank runs), so cash will be useful? So, small denomination gold, cash  storable foodstuffs, any medicines, and unfortunately *something to defend yourself with*??




Your *wits* are the best defence.

Old wise saying says "Keep your *wits* about you".

Don't let the gummint twits in white coats come and drag your *wits* off....


----------



## Logique (16 June 2011)

Commodities not looking too flash either:
http://www.kitco.com/reports/KitcoNewsMarketNuggets20110615.htmlMarket 
Nuggets: Hackett Financial Advisors: Commodity Bear About To Pay Visit
15 June 2011, 
By Kitco News 
http://www.kitco.com/

"(Kitco News) -- Shawn Hackett, president of Hackett Financial Advisors, looks for *commodities collectively to tumble in the near future*.  A research report to clients Wednesday says agricultural stocks and Chinese equities have underperformed lately, just as they did before the commodities crash in 2008. “Copper prices declined in advance of the major commodity top in 2008 and the recent weakness in copper prices should offer similar topping signs,” he says.........."   
By Allen Sykora of Kitco News; asykora@kitco.com


----------



## drsmith (16 June 2011)

Of interest, there's currently no sign of panic on the TED Spread.  

http://www.bloomberg.com/apps/quote?ticker=.TEDSP:IND


----------



## Glen48 (16 June 2011)

The way I see it it is like giving some 13 year old kid 30K credit card they go of and buy important things like mobile ph. designer clothes, holidays and spend the rest is spent unwisely translate kid to Feds world wide and you have the same problem. My worst three years at school were trying to pass Grade one maths yet I can see we have over spent and you wonder the value of a MBA or UNI education like Big Ben has when they keep printing .
I guess in his case he is there until he can retire in some far away place and change his name and we will have a enclave like the Nazis's in Brazil after ww2 with the rest of the elite.
 I would take 300, 000 years to count the amount of money USA owes.

I haven't seen any positive news since this started , look at Greece 2 week ago they denied they will need a bail out now they are filling in the bankruptcy forms which will drag down European countries,

Australia is living on borrowed time and the world is on a edge thats why I am living over here paying 50 c a KG for tomato's I was thinking of move in to the country but found out that is not the answer as you need hospital and close by neighbors when the shooting starts.

I have realised over the years some  things don't work out the way you figured  just like the markets but you can only hope you are making  the right decisions and this is were ASF come in to its own.

 Like to see a poll on recession /depression one day.


----------



## drsmith (16 June 2011)

Glen48 said:


> My worst three years at school were trying to pass Grade one maths........



I can only assume you were given cigarettes as counting aids on the first two attempts.


----------



## Glen48 (16 June 2011)

Doc Smith 
 Think you have hit on some thing  therem maybe we should send out giggies to Big  Ben et al.


----------



## basilio (17 June 2011)

The situation in Greece is looking really ugly... It almost looks as if default is certain.

The probability of the pressure of such a default spreading to Spain and Portugal also seems overwhelming.  On that basis major European banks would be insolvent. How other financial centres could stay operational would be a mystery.

Given the history of the last financial crisis "solutions" would range from throwing further billions to bankers to wholesale reductions in government expenditure to meet debt needs. And because financial markets are now so instantly interconnected collapse could be very quick.

What happens if the atms don't spit out money ? What happens if we can't access our bank accounts  ?  How would  wages, bills, business payments and pensions be paid ?

Of course this hasn't happened before so it can't happen now can it ?

_(I  really hope this is just a bad late night dream._.)


----------



## cynic (17 June 2011)

Glen48 said:


> My worst three years at school were trying to pass Grade one maths yet I can see we have over spent and you wonder the value of a MBA or UNI education like Big Ben has when they keep printing .



Maybe his only true qualification is as a printer and then he just printed all his MBA's and other qualifications along with all that money he's been printing lately.



Glen48 said:


> I would take 300, 000 years to count the amount of money USA owes.




No it wouldn't! You've still got plenty of fingers and toes haven't you? Just repeat after me:

one trillion,two trillion, three trillion.....


----------



## explod (17 June 2011)

He he he, dont you worry about just a few trillion.  Forget the source now, "Privateer" or somewhere some year or so back now, it was stated that the total US debt, private and public combined is something like 600 trillion.

And we talk about less than a trillion for Greece.

The world *has* gone mad.


----------



## sptrawler (17 June 2011)

basilio said:


> The situation in Greece is looking really ugly... It almost looks as if default is certain.
> 
> The probability of the pressure of such a default spreading to Spain and Portugal also seems overwhelming.  On that basis major European banks would be insolvent. How other financial centres could stay operational would be a mystery.
> 
> ...




Maybe they will have to go back to gold as a reserve currency. Now that would crank the price of gold. How would it go" dived the worlds currencies on issue by the number of gold ounces available".
Now that would be something to see. LOL,LOL,LOL


----------



## sptrawler (17 June 2011)

This statement by Greenspan. 
http://www.smh.com.au/business/worl...st-certain-greenspan-says-20110617-1g6px.html

Won't help sentiment at all.


----------



## Glen48 (17 June 2011)

Here is another


http://goldscents.blogspot.com/2011/06/bear-is-back-and-this-time-it-will-be.html


----------



## Glen48 (17 June 2011)

No worries lot of spare cash around if you can get your hands on it:
Talk about disasters! The Pentagon continues its efforts to bankrupt the country. Judicial Watch reports: 

Bundled in chunks of $100 bills, the cash was sent from the US to Iraq in turboprop military cargo planes known as C-130 Hercules. About $2.4 billion fit in each aircraft and 21 flights made trips, transporting a total of $12 billion in American currency to Iraq by 2004.

For years federal audits have determined that more than half the money cannot be accounted for but there seemed to be some hope that some of the funds could be retrieved. However, this week the Special Inspector General for Iraq Reconstruction (Stuart Bowen) essentially confirmed that $6.6 billion in cash was likely stolen and may never be recovered. 

Bowen referred to it as "the largest theft of funds in national history," in a newspaper report that points out the missing money is enough to run a major public school district for an entire year. The story also says that the mystery is a growing embarrassment to the Pentagon, which has long asserted that it could track the cash if given the time to do it. 

This is simply the latest of many reports documenting the pervasive fraud and waste in Iraq reconstruction efforts, which have received more than $100 billion from US taxpayers. In the last few years Inspector General audits have exposed the sordid details of costly projects that never got completed or are rife with excessive delays and shoddy work.


----------



## explod (17 June 2011)

Nah Glen48, they are just making sure there is plenty of cash for a person just like you.

When will it all blow up, the following gives us some ideas perhaps.  Or blow down perhaps, because this thread is about slump?

http://www.financeandeconomics.org/Articles archive/2011.06.09 Weak money.htm


----------



## KurwaJegoMac (17 June 2011)

I suggest everyone grab a copy of "The Book of Eli" movie and start watching. It'll show you what life will be like in the next ten years and the sorts of objects that will become highly tradeable (shampoo and books - start storing now)

While you're at it, you better start digging in your back yard and setting up an underground bunker. Ensure you have provisions for a minimum of 10 years, plus an assortment of seeds, fertiliser, some livestock (muzzle 'em if you have to so the neighbours don't know you have some) and a suitable mate (the opposite gender kind). Ensure plenty of weapons and ammunition and at least 1 Rocket Launcher (for blowing down the door of your neighbour's bunker).

After 10 years once 99% of the people in the world have killed each other (damn cannibals!) you can emerge from your bunker (keep that shotgun in hand) and find a nice patch of ground to set up your base (preferably on a hill so you can see the cannibals coming), plant your seeds and allow your livestock to graze. Set up decent fortifications overlooking all directions leading to your home base. Set up booby traps to alert yourself to any incoming foes and then grow your crops and livestock and engage in regular mating in order to ensure the continuation of our species.

As a final note, ensure you teach your children about the failures of capitalism. We wouldn't want the world to fall apart again in the next few hundred years.

Good luck to you all.


----------



## drsmith (17 June 2011)

KurwaJegoMac said:


> , some livestock (muzzle 'em if you have to so the neighbours don't know you have some)......



What about the smell ?

Sewing up the other end is obviously not an option.


----------



## Glen48 (17 June 2011)

I assume a harem is not classed as live stock?
 Bummer


----------



## KurwaJegoMac (17 June 2011)

drsmith said:


> What about the smell ?
> 
> Sewing up the other end is obviously not an option.




A clothes peg on the nose should do it. After wearing it for long enough your nose will close up permanently and you can take off the peg.


----------



## KurwaJegoMac (17 June 2011)

Glen48 said:


> I assume a harem is not classed as live stock?
> Bummer




Well if you're into cannibalism then sure, go for it.

Or you could be a vegetarian *shudders*


----------



## Calliope (17 June 2011)

basilio said:


> The situation in Greece is looking really ugly... It almost looks as if default is certain.
> 
> The probability of the pressure of such a default spreading to Spain and Portugal also seems overwhelming.  On that basis major European banks would be insolvent. How other financial centres could stay operational would be a mystery.
> 
> ...




Yes it is not looking good. The biggest problem seems to be the lack of clear political leadership in the Western World. While Greece, Ireland , Portugal and Spain are floundering the political leaders in France, Germany and Italy don't seem to have any answer, and are mainly concerned with hanging on to their jobs.


----------



## jaystar86 (17 June 2011)

Calliope said:


> While Greece, Ireland , Portugal and Spain are floundering the political leaders in France, Germany and Italy don't seem to have any answer, and are mainly concerned with hanging on to their jobs.




and... America, England, Australia, NZ (insert basically any western country)


----------



## sptrawler (17 June 2011)

KurwaJegoMac said:


> I suggest everyone grab a copy of "The Book of Eli" movie and start watching. It'll show you what life will be like in the next ten years and the sorts of objects that will become highly tradeable (shampoo and books - start storing now)
> 
> While you're at it, you better start digging in your back yard and setting up an underground bunker. Ensure you have provisions for a minimum of 10 years, plus an assortment of seeds, fertiliser, some livestock (muzzle 'em if you have to so the neighbours don't know you have some) and a suitable mate (the opposite gender kind). Ensure plenty of weapons and ammunition and at least 1 Rocket Launcher (for blowing down the door of your neighbour's bunker).
> 
> ...




I am not sure the Greens leader will agree with parts of your survival notes.


----------



## Glen48 (17 June 2011)

So lets hope we do have a slump the other avenues are not to good.
 Unless you want to place  bet's on when the DOW will tank ad QE3 starts good to be short on every thing.


----------



## sptrawler (17 June 2011)

Well Glen, it is going to require some really good news i.e everyone gets $5,000 to spend.
If this isn't forthcoming and we go below 5,500 strap yourself in, it will be an exciting ride.


----------



## Glen48 (18 June 2011)

All uncharted waters at least we can say we saw and myaube survived the big one. 
 Paying 5 k is the same as Big Ben and his chopper will do nothing but help the overseas companies and Hardly Normal etc.


----------



## Calliope (18 June 2011)

*Euro on rack as Angela Merkel and Nicolas Sarkozy meet*. If the Euro goes pear shaped another GFC will not be far behind.




> The economic crisis in Greece threatens the survival of the euro, the common destiny of Europe and its peace and stability, French President Nicolas Sarkozy says.
> 
> Europe's two most powerful leaders, Mr Sarkozy and German Chancellor Angela Merkel, planned to meet in Berlin last night to save the single currency from destruction.
> 
> ...




http://www.theaustralian.com.au/new...las-sarkozy-meet/story-e6frg6so-1226077305286


----------



## tothemax6 (18 June 2011)

Calliope said:


> *Euro on rack as Angela Merkel and Nicolas Sarkozy meet*. If the Euro goes pear shaped another GFC will not be far behind.



God I hope the Euro gets blown up. The EU is the scariest political body since the politburo. There isn't a single leader in Europe that could not be classified as socialist.


----------



## IFocus (18 June 2011)

tothemax6 said:


> God I hope the Euro gets blown up. The EU is the scariest political body since the politburo. There isn't a single leader in Europe that could not be classified as socialist.




It going to get real scary when not if the extreme nationalist types get in and start banging the war drums.

History doesn't repeat but often rhymes.


----------



## tothemax6 (18 June 2011)

IFocus said:


> It going to get real scary when not if the extreme nationalist types get in and start banging the war drums.



Something I have been saying for a while. Its going to be one bad bunch after another.


----------



## noirua (18 June 2011)

Forget about Europe and the UK (they don't think they are part of Europe) as Australia is a Far East Country. Only be involved in Asia and The Far East and to hell with Europe, Greece and America.
Some Aussie banks have piled money into Europe, even the English/French Channel Tunnel. The money should have stayed in Asia and The Far East.

A slump could occur if the labor Government, QLD and NSW try to stop or reduce the mining sector.  Australia = selling resources ---  selling less resources = slump --- putting off Chinese investment (note Shenhua's NSW coal mine reversal) = QLD, NSW, Gillard led slump.


----------



## konkon (1 July 2011)

The very _public_ public versus private battle in the US (and other countries like in Greece) is potentially going to elevate the global financial crisis to a higher, but less predictable, level. Compromise will eventually come at every stage, but the decisions may be too little too late (especially too late). Well, too little will be an issue too. 

There will be way too much grandstanding in congress from both or all sides. A lot of the problems have been reinforced by congress (over the years) and it is amazing to find that the system as it stands only allows congress to 'solve' the current and future economic problems. Turn on the TV and I bet it won't take long before some reporter is interviewing some congressman on the economy. The delays themselves will likely cause more economic problems. 

I still believe that the US will not be as harmed as other nations if a default (in the future) occurs. It will be devastating for (nearly) all people, but other creditor nations will suffer the most. All countries will suffer of course, but there will be those that will (and will look to) benefit from such a default; your short sellers and those betting on inverse models/trades are some. So will some US banks (one in particular!). Maybe two if you consider the Federal Reserve. 

Perhaps the biggest issue in the coming few years onwards will be the sheer fact that a reissuance of new debt (dressed-up to look like something else perhaps) will NO LONGER be a viable and meaningful option to pay for all of the layers of past and future debt obligations. The financial crisis of 2008 wasn't solved. It was washed-over with more (perhaps unpayable) debt. The next few rounds of this will not make any sense whatsoever. Nor does the Federal Reserve's actions of continuing to buy-up US debt over the coming years. This might mean that the US will never be in a position to challenge the Federal Reserve in any way as the Federal Reserve, as a powerful and very influential institution, would have diluted itself in more parts of the US economy than was intended. As for those that think that the Federal Reserve can easily be abolished; the answer is clearly NO. 

Can order really come out of (a goal-posts-shifted, not-on-the-same-page and disorganized) congress? Well you're not going to get a long-term, sustainable and meaningful set of solutions from a system that lacks order and uniformity. Not blaming individuals or sides here. The system as it stands just won't allow for all the necessary and timely changes that need to occur.

One reason why we are unique is because we are able to reverse disorder (that naturally occurs in the universe) for a period of time. We take this for granted but they are perhaps the biggest sets of skills we possess and congress and co. can use, especially in this day and age. Without using these skills you may as well get my cat and all of her alley-cat friends to organize things for you.


----------



## Glen48 (2 July 2011)

Another disaster :

By Porter Stansberry  
Saturday, July 2, 2011


Yesterday, I left you with a question…

Over the past few days, I've described what I call New American Socialism. As I've shown you, it's a kind of legal corruption whereby the risks of doing business are assumed by the taxpayers… but the profits still accrue to private enterprise.

The corruption has infected one industry after another. And it's weighing down our economy… But I've actually preferred having it in many of the stocks I've recommended over the years. It tends to be good for investors.

So the question now is, am I still interested in buying into New American Socialism? It's a difficult question… and the answer is complicated. So bear with me…

----------Advertisement----------
A Stunning Power Shift – Back to the USA

If this video is any indication, we're about to see one of the greatest power shifts in geopolitical history.

A move that would have been simply unimaginable a decade ago.

And for investors on the right side of this trend, it could mean a windfall.

Click here for the full story. 
---------------------------------


In yesterday's essay, I described a tragedy unfolding in the education sector. If you missed the essay, I suggest you go back and give it a read. You'll find the numbers disturbing.

Essentially, the for-profit education industry is selling a product its customers cannot afford.

This industry games the rules of the government and spends a fortune on lobbying – more than $12 million in the last year. This industry would literally not exist without government-guarantees standing behind 90% of its revenues.

And Wall Street experts estimate this industry will rack up around $250 billion in credit losses over the next decade – an amount of money that exceeds the losses from Fannie Mae and Freddie Mac so far.

All these risks will eventually cost the U.S. Treasury billions of dollars. You see, this industry overwhelmingly targets women and minorities – people who are often up against a wall financially. These students will never be able to repay these debts.

While these students have no financial skin in the game (many borrow 100% of their tuition), they face enormous consequences down the road from this scheme… Student loans are notoriously difficult to discharge, and many borrowers will be crippled financially by the obligations they cannot afford.

The facts of this situation are incontrovertible and well known – even inside the current president's administration. And yet… even when all of these facts were studied and reviewed… what did the president do?

Critics had demanded so-called "gainful employment" regulations that would limit how much a student could borrow to an amount of money he would likely be able to repay based on the current employment and income track record of other alumni. Obviously, such sensible regulation was never likely to be implemented by Washington… especially not by a minority president when the funding in question goes overwhelmingly to poor, minority students.

Instead, in early June, Obama's administration promulgated a new set of rules that were supposed to address the abuses and the risks of the government's generous funding rules for for-profit education.

The new rules actually loosen the funding requirements – substantially.

Colleges will be eligible for federal support as long as at least 35% of their students are repaying their loans over the first three years. Now, up to 65% of the students can default. And what about limiting loan amounts to ability to repay? Loan amounts may not exceed 30% of anticipated discretionary income.

How will students pay for food, housing, transportation, insurance, etc. if they're spending 30% of their incomes on student loans?

Rather than tightening the standards, the new rules actually loosen the standards. They also go further in guaranteeing continued federal support. Under the new rules, no schools will lose funding until 2015 at the soonest, to give them time to adapt to the new "standards," which were trumpeted as a major reform.

Only in Washington D.C.

The for-profit education "business" is one of the most obvious frauds ever foisted on the American people. The industry has been structured to take advantage of the least sophisticated members of society. It promises benefits the average student is unlikely to achieve: a better job and a better life. Instead, these students are saddled with unpayable debts and enjoy no corresponding increase in wages.

Assuming the government should not do anything to protect the students from this fraud, shouldn't the risks of perpetrating this fraud be left with the companies themselves? Let for-profit education companies guarantee these loans. Let them take the risk that these debts will never be repaid.

But that's not how New American Socialism works. What happens is, all the profits of this scam go to the executives and the shareholders. The risk goes to the government.

Our leaders are now so corrupted by New American Socialism they can't even stop the for-profit education scheme I describe above.

The facts, by the way, aren't even in dispute. This is the obvious stuff – the stuff no one can really dispute. If our leaders let this industry rack up $250 billion in bad debts over the next decade, how can we expect them to do anything to stop our massive annual deficits and our runaway federal debt?

If the administration can't stop the for-profit education industry from getting its hands into the U.S. Treasury, whom will it stop? Nobody.

So the only real question is: Do I want to be buying stocks – any stocks – right now?

When I consider the unsustainable debts and unfunded liabilities the government has taken on… and the upcoming credit crisis New American Socialism has created… I arrive at the answer: "No."

Regards,

Porter Stansberry


----------



## Wysiwyg (3 July 2011)

Glen48 said:


> Another disaster



Yeah buddy. I have invested in a Manilla taxi so hope to see you on the rounds over there soon. Will bring over cans of baked beans, Sui Min and toilet rolls in preparation for the impending obliteration of the world.

All the best and see you soon, Wizz.


----------



## Glen48 (3 July 2011)

Ok good will pick you up at airport fly Tiger Airways ok!


----------



## sptrawler (12 July 2011)

That 5500 support level is being tested again. 
What with Julia and our crazy carbon tax, the U.S stating that it is going to be quite some time before things pick up (thats an understatement) and Europe trying to work out how to give money to the pigs when there is no chance of it being paid back.
It is really hard to find anything that will drive up consumer confidence. Noni B first cab off the rank with a profit downgrade, $3.9m last year $600-800thou this year, that is one hell of a profit downgrade. 
How long before major job losses in retail given the added down side of the carbon tax. Some say the carbon cash handout will stimulate retail spending before the election. However "Joe" average is still smarting from the last one, I don't think they will be as keen to runout and spend it this time.
The indicators say we will be testing the next support level very soon, I for one am supprised the All Ords has stayed above 5500 untill now.


----------



## Aussiejeff (12 July 2011)

sptrawler said:


> That 5500 support level is being tested again.
> 
> *snip* The indicators say we will be testing the next support level very soon, I for one am supprised the All Ords has stayed above 5500 untill now.




The All very Ordinaries has only managed to stay above 5500 with the assistance of 

(a) a vast array of smoke and mirrors from innumerable sources,
(b) a bad batch of Chines Fortune Cookies containing an overdose of gumint spin.  

A slight *whiff* of an ill-wind has wafted in from the PIIGS ar$e and just parted the cloud of magic smoke in the den of in-equitie$ for a brief moment. Expect a HUGE blast of pollywaffle before the week is done in an effort to subdue the rising bile & panic....

LOL

aj


----------



## basilio (12 July 2011)

Many may have already seen this site but in case you havn't it is a good education.

It offers a running set of figures on the American debt levels at all levels.  Federal, State local Trade deficits the lot.  

It explains what each category means. It offers a picture of the situation from 2000 onwards and projections to 2015.

I just cannot see how this won't end  in tears.

http://www.usdebtclock.org/index.html


----------



## Logique (13 July 2011)

Rome is Burning
Jon Nadler, Senior Metals Analyst – Kitco Metals: http://www.kitco.com/ind/Nadler/jul122011.html
Tuesday July 12, 2011 (my bolds)

"..Marketwatch’s Robert Powell tenders the opinion that the *failure to raise the US’ debt ceiling by the August 2nd deadline would have a truly devastating effect on ALL markets*: bonds, stocks, money markets, commodities, etc. Mr. Powell cites CFA Greg McBride who argues that the meltdown of 2007-2008 could be labeled as a mere hors d’oeuvre for the feast of the bears that might come in the wake of a no-deal debt deal in America.

Mr. McBride minces no words and declares that the event would prompt a ““*rapid re-pricing*” of all financial assets, not just Treasuries. In other words, the value of your 401(k) plans, IRAs, 529 plans, gold and real estate will all collapse. 

And the reason for that is this: What is fundamental to the pricing of financial assets is the notion that U.S. Treasuries are risk-free. All financial assets are priced based on this assumption (or hope). If Treasuries are no longer risk-free, then all financial assets have to be re-priced against another a benchmark. 

And this time, investors won’t have a safe haven to which they can flock as they did during collapse of 2008. “There will be no place to hide,” said McBride. “Treasuries will no longer be safe in the event of a default.” Ditto real estate, gold, and farm land. In short, there will be no flight to safety because *no asset will be safe*. “Even cash might not be a safe haven.”  No exit. No safety net. None.."


----------



## Uncle Festivus (13 July 2011)

Aussiejeff said:


> The All very Ordinaries has only managed to stay above 5500 with the assistance of
> 
> (a) a vast array of smoke and mirrors from innumerable sources,
> (b) a bad batch of Chines Fortune Cookies containing an overdose of gumint spin.
> ...




Very elegant indeed AJ 

But remember, PIIGS have been flying for 4 years now. All is, um, 'contained', if I could borrow a word from B Bernankes Concise Dictionary of Market Calming Words & Phrases.

Just trying to work out how to come up with an acronym for the UK, Japan, China & the USA?? PIIGS R Them Too?


----------



## sptrawler (13 July 2011)

sptrawler said:


> That 5500 support level is being tested again.
> What with Julia and our crazy carbon tax, the U.S stating that it is going to be quite some time before things pick up (thats an understatement) and Europe trying to work out how to give money to the pigs when there is no chance of it being paid back.
> It is really hard to find anything that will drive up consumer confidence. Noni B first cab off the rank with a profit downgrade, $3.9m last year $600-800thou this year, that is one hell of a profit downgrade.
> How long before major job losses in retail given the added down side of the carbon tax. Some say the carbon cash handout will stimulate retail spending before the election. However "Joe" average is still smarting from the last one, I don't think they will be as keen to runout and spend it this time.
> The indicators say we will be testing the next support level very soon, I for one am supprised the All Ords has stayed above 5500 untill now.




obviously the institutions are worried and propping up the index. I am sure it is not the mum and dad investors buying at the moment.
Consumer confidence is at its lowest in 2 years, that must be pretty low because going off retail sales people haven't had much confidence for the last 2 years. LOL
Anyway its good to see the superfunds pumping our money into a dud market. I just wish the super funds were only paid as a percentage of the profits they make. As opposed to a percentage of funds under management, then you wouldn't see them throwing good money after bad.


----------



## Aussiejeff (13 July 2011)

sptrawler said:


> *obviously the institutions are worried and propping up the index. I am sure it is not the mum and dad investors buying at the moment.*
> Consumer confidence is at its lowest in 2 years, that must be pretty low because going off retail sales people haven't had much confidence for the last 2 years. LOL
> Anyway its good to see the superfunds pumping our money into a dud market. I just wish the super funds were only paid as a percentage of the profits they make. As opposed to a percentage of funds under management, then you wouldn't see them throwing good money after bad.




Today's big "prop" comes courtesy of 







> Chinese GDP data for the second quarter shows the world's second largest economy grew 9.5 per cent in the June quarter compared to a year ago.



http://www.abc.net.au/news/2011-07-13/china-economy-boost-market/2793324?section=business

Apparently this was a "smaller than expected decline in the Chinese GDP growth" and therefore "good". Once upon a time in the short term past, ANY suggestion that China's GDP growth rate was going backwards AT ALL would have caused a share slump! Now, "smaller than expected" declines cause a big jump! LOL. I love how Mr Market & his tru$ty henchmen will try to turn a buck on any slant of the bamboo curtain....

The other larf about this is that 99% of "economists" appear to take the bait offered by Chinese officials without question with regard to GDP growth or any other economic data for that matter. Owing to the fact they have amassed oodles of luvly $$$$$$$$$$$$$$$$$$$$$$$$$$$$, they have flipped from an "untrustworthy communist sworn enemy" (where EVERYTHING positive they had to say was not to be trusted) to a "100% trustworthy economic partner" (where EVERYTHING they say is to be trusted implicitly) - all in a handful of years. Double-LOL. 

I love how $$$$$$$$$$$$$$$$ can warp people's judgement.


----------



## Glen48 (13 July 2011)

August 02 the pin will come out of the handgenade ,,,then stad back and see what is left standing.


----------



## sptrawler (25 July 2011)

sptrawler said:


> Colarado closing down another 1000 jobs gone. The Retravision store near me is closing at the end of the month after 20years. The owner reckons it isn't worth keeping it open.
> So the unemployment figures are going to start ratcheting up.
> The slump appears to be gaining momentum.
> Don't want to be a prophet of doom, but a recession is looking to be on the cards. I guess it's just one of those recessions you have to have when Labor are in. LOL




And so the closures continue, add to this the flow on effect of the carbon tax fallout to unemployment and the gloom deepens.
http://www.smh.com.au/business/more-retail-woes-premier-shuts-50-fashion-shops-20110725-1hw37.html
Wonder who will be next?


----------



## sptrawler (3 August 2011)

Lets see if 4500 is broken through today, if it is buying time may be closer.


----------



## Trevoru (3 August 2011)

Is it too late to call it at 11.23am on the 03/08/2011?
Time to hibernate for a couple of months me thinks.
GLTA
TU


----------



## KurwaJegoMac (3 August 2011)

Trevoru said:


> Is it too late to call it at 11.23am on the 03/08/2011?
> Time to hibernate for a couple of months me thinks.
> GLTA
> TU




I'm going to be loading up soon - after GFC 1 everyone was talking with hindsight about how they should have bought. Well it looks like the 2nd opportunity is coming.

Who will be courageous enough to take it? 

Oh well, more fore me


----------



## Wysiwyg (3 August 2011)

Glen48 said:


> August 02 the pin will come out of the handgenade ,,,then stad back and see what is left standing.



Very accurate with the dates there Glen. The overnight reaction to some excuse has seen our market participants panic today. Mining industry still intact last time I checked.


----------



## Trevoru (3 August 2011)

KurwaJegoMac said:


> I'm going to be loading up soon - after GFC 1 everyone was talking with hindsight about how they should have bought. Well it looks like the 2nd opportunity is coming.
> 
> Who will be courageous enough to take it?
> 
> Oh well, more fore me




Been accumulating for the past 4 months - no $'s for anymore.
C'est la vie - it will turn at some stage.


----------



## Tysonboss1 (3 August 2011)

KurwaJegoMac said:


> I'm going to be loading up soon - after GFC 1 everyone was talking with hindsight about how they should have bought. Well it looks like the 2nd opportunity is coming.
> 
> Who will be courageous enough to take it?
> 
> Oh well, more fore me




Your at K-mart and the red light is on, There is bargains everywhere.


----------



## KurwaJegoMac (3 August 2011)

Tysonboss1 said:


> Your at K-mart and the red light is on, There is bargains everywhere.




It's like the store is closing down and liquidating all stock


----------



## sptrawler (3 August 2011)

Trevoru said:


> Is it too late to call it at 11.23am on the 03/08/2011?
> Time to hibernate for a couple of months me thinks.
> GLTA
> TU




The thread started 5/4/2011 its not a time for hibernation, these are the times when you pick up quality at a discount. LOL


----------



## skc (3 August 2011)

KurwaJegoMac said:


> I'm going to be loading up soon - after GFC 1 everyone was talking with hindsight about how they should have bought. Well it looks like the 2nd opportunity is coming.
> 
> Who will be courageous enough to take it?
> 
> Oh well, more fore me




In GFC 1 the US market lost 50% from its peak to the bottom.

Now the US market is only 8% or so down from recent peak.

Too early to make a comparison?!


----------



## sptrawler (3 August 2011)

If the All Ords touches 4200 I will be loosening the purse strings.


----------



## VSntchr (3 August 2011)

Who thinks there will be a slump? 
Isn't the better question - when will the slump end?

In my mind we have never really recovered from the GFC, sure the market bounced off its low - but we are still nowhere near the previous high..


----------



## basilio (3 August 2011)

Some unnerving drops in the past few days. All very well to talk about going back into the market but the last crisis saw ASX go to 3300 . 

Makes one wonder about the "fundamental value" of our portfolio.


----------



## Aussiejeff (3 August 2011)

basilio said:


> Some unnerving drops in the past few days. All very well to talk about going back into the market but the last crisis saw ASX go to 3300 .
> 
> Makes one wonder about the "fundamental value" of our portfolio.




Indeed. We could well be on the precipice of Monster GFC MkII.

Some of the worrying signs for me are...

(1) US "debt deal" (aka "smoke & mirrors") has not given a healthy boost to the markets. Obviously market analysts can see past Obama's rhetoric! It can only be all down hill from here, especially once the detail of those spending cuts is released (must be some real nervous companies that contract services to the US gummint). followed by mass sackings, layoffs etc.

(2) Eurozone reporting season is shaping up to be a doozy - eg: big banks slashing profit forecasts & throwing 1,000's of employees on the scrapheap (fat lot of good that does for increased consumer spending!)

(3) Warning today that this years corn production in US is suffering badly in heat wave conditions. http://online.wsj.com/article/SB10001424053111903341404576484503303241430.html. If this continues, world food prices will spike yet again. Not good for anyone...

(4) I think some elephants are still in the room re: Oz reporting season. As usual, those wanting to beat their chest and pronounce great profits are out of the blocks first. Methinks there are still a heap of potentially big downgrades to come, especially in retail & manufacturing - the poor performers wont want to show their hand till the last possible minute in this downward spiralling climate (saw the same approach during GFC 1). 

*sigh*

It all looks soooo familiar. I wish it wasn't happening....


----------



## Garpal Gumnut (3 August 2011)

Moi, just about full of cash.

gg


----------



## explod (3 August 2011)

No worries,,,,,,,,,,,, Moodies reaffirmed the US triple A rating today.

Go back to sleep brothers the party is too hectic for us codger and codgesses.

And I dont' like heights anyway.


----------



## skc (3 August 2011)

Aussiejeff said:


> (4) I think some elephants are still in the room re: Oz reporting season. As usual, those wanting to beat their chest and pronounce great profits are out of the blocks first. Methinks there are still a heap of potentially big downgrades to come, especially in retail & manufacturing - the poor performers wont want to show their hand till the last possible minute in this downward spiralling climate (saw the same approach during GFC 1).
> 
> *sigh*
> 
> It all looks soooo familiar. I wish it wasn't happening....




Don't most companies already scheduled in their reporting? I didn't know they get to choose and pick the dates?!


----------



## Glen48 (3 August 2011)

All indications the madhatters tea part et al talks agreeing  on nothing should have signaled it party hard time again,, but Mr. Market and gold have other ideas if gold keeps going up each day between now and Xams the partys over ,, nothing to see move along just go home and wait . start up you own funeral home plenty of work coming up.


----------



## Uncle Festivus (4 August 2011)

KurwaJegoMac said:


> I'm going to be loading up soon - after GFC 1 everyone was talking with hindsight about how they should have bought. Well it looks like the 2nd opportunity is coming.
> 
> Who will be courageous enough to take it?
> 
> Oh well, more fore me






Trevoru said:


> Been accumulating for the past 4 months - no $'s for anymore.
> C'est la vie - it will turn at some stage.




Ouch! those knives are sharp! 





Why would you buy at _the start_ of GFC phase 2? I'll be the one shorting to your bid 

Your only hope will be when they anounce QE3,4 & 5......timing.

ie don't you realise the world is entering a new, much worse, recession, perhaps depression?


----------



## Garpal Gumnut (4 August 2011)

It is all cyclical.
1,2,3,4,5,a,b,c,1,2.......

gg


----------



## KurwaJegoMac (4 August 2011)

Uncle Festivus said:


> Ouch! those knives are sharp!
> 
> View attachment 43835
> 
> ...




When banks were collapsing and ours had lost 50% of their value i loaded up on them. Made close to double since then and of course enjoyed some lovely dividends too. This was at a time when credit had frozen around the world and there was blood on the streets.

Will it happen again? Quite possibly - and if we get some more capitulation i'll buy in again. 

As the saying goes, "this too, shall pass".


----------



## skc (4 August 2011)

KurwaJegoMac said:


> As the saying goes, "this too, shall pass".




Says the Japanese trader in late 1980s.

It may pass... but when?!


----------



## Uncle Festivus (4 August 2011)

KurwaJegoMac said:


> As the saying goes, "this too, shall pass".




Maybe not. It's all about too much debt and not enough income to pay it off, only on a global scale. Turning Japanese

Do some study on debt to GDP ratios - Greece is just the warm up act........Italy is 10 times worse, the US is 7 times worse than Italy......a great period of austerity is here.


----------



## notting (4 August 2011)

Recovery is going to be slow just like Japan.
Markets, however, should perform strongly because there is so much money around.
There is also a stack of people waiting to get back in who off loaded during the last crisis.  
Inflation may rise but that just means everything goes up in the end and it's another way of raising taxes without raising taxes because every things getting relatively less, including dept! Politically friendlier.  Everyone's taking a hair cut but now the economy in general is holding the scissors not the leader etc. 

The workers lose.

The last thing you want to be in is cash when it turns.
That's what really loses value.  
Things just keep going up, service, materials, merchandise stocks - represent things!  Money is money and loses and loses.  There's stacks around everywhere!!
It has to be this way because of what China has done with their fake low currency.
It's the only way to balance things up a bit.

I'm not going in really hard till there's some real panic and people are throwing stocks out the windows in the mean time I'm just nibbling away.


----------



## LifeChoices (4 August 2011)

Uncle Festivus said:


> Do some study on debt to GDP ratios - Greece is just the warm up act........Italy is 10 times worse, the US is 7 times worse than Italy......a great period of austerity is here.




Where did you get this from? I did all the all right things: I punched "country debt to GDP ratios" into the google machine and didn't find the figures you see:

I found some wiki pages - but nothing that backs your claims: 
http://en.wikipedia.org/wiki/List_of_countries_by_external_debt

This page suggests Ireland is the worst off.


----------



## Uncle Festivus (5 August 2011)

LifeChoices said:


> Where did you get this from? I did all the all right things: I punched "country debt to GDP ratios" into the google machine and didn't find the figures you see:
> 
> I found some wiki pages - but nothing that backs your claims:
> http://en.wikipedia.org/wiki/List_of_countries_by_external_debt
> ...




Sorry, I said debt to gdp then put down the relative debt levels from memory 

With the extra $900B for the US they are now over 100% debt/gdp or approx $15T
Italy has $2.4T debt, 119% debt to gdp
Greece has $300B debt (& counting), 143% debt to gdp
Ireland has for all purposes been written off already....

I think this can pass for a 'slump'? Another 80 pts off the XJO today by the looks......and we still have the abysmal US non farm employment number out tonight, which could go negative!!


----------



## tminus (5 August 2011)

That is a clear double top there, why was there a rapid sell off late in the day (in the Dow), were the unemployment figures leaked to the big firms?


----------



## KurwaJegoMac (5 August 2011)

skc said:


> Says the Japanese trader in late 1980s.
> 
> It may pass... but when?!




Very true. When will it pass? No one can tell you that of course - but is one to freeze in fear and never hold equities due to what happened in one country? 

Still, while we have stuff to dig out of the ground and a growing population im not too worried. As mentioned above, inflation will be the kicker. Look what the US is doing - driving up inflation to inflate their debt away and lowering the USD to stimulate their exports. As the Russian President said, they're just leeching off the world rconomy - everyone knows it. Well worth taking advantage of the situation


----------



## skc (5 August 2011)

Uncle Festivus said:


> Sorry, I said debt to gdp then put down the relative debt levels from memory
> 
> With the extra $900B for the US they are now over 100% debt/gdp or approx $15T
> Italy has $2.4T debt, 119% debt to gdp
> ...




Last night was incredible. The fear got so bad even gold and silver took a dive. 

I think the US debt isn't a problem anymore... they've just showed how people still tripping over themselves to lend them money (i.e. buying treasuries) in times of crisis... speaking of an irrational market.

It is hard to imagine the non-farm sparking further sell off tonight. The market has priced in very bad data. But I suppose extremely bad data will probably do it...


----------



## sptrawler (5 August 2011)

Yes I think last night on the U.S market will pull the plug on our market, margin calls will be the go today, that is if anybody was silly enough to have a margin loan.
Add to this the collapse of retail, the carbon tax fears and the ridiculous government undermining confidence. 
We have a perfect recipie for a recession, the slump has begun. Wait untill the unemployment begins to kick in from retail.

http://www.smh.com.au/technology/te...net-sales-wont-save-shops-20110804-1idmu.html


----------



## KurwaJegoMac (5 August 2011)

Uncle Festivus said:


> Sorry, I said debt to gdp then put down the relative debt levels from memory
> 
> With the extra $900B for the US they are now over 100% debt/gdp or approx $15T
> Italy has $2.4T debt, 119% debt to gdp
> ...




I wouldn't compare the US with Italy, Greece or Ireland because the effects on the US and the countries in the Eurozone will be vastly different (in terms of GDP being over 100%). 

The Eurozone countries have a fundamental difference to the US - the US issues its' own currency, while Greece, Italy and Ireland do not. That is why hardly anyone is blinking an eyelid about the US debt and they are focusing instead on the Eurozone. The Eurozone requires intervention from the EU (read: Germany) for funds to pay back its' debts (i.e. bailouts) because they cannot print their own money (like the US can) and cannot deflate their currency (as the US have) in order to stimulate exports.

That's why the Eurozone countries are the main focus - without 'bailouts' they will go bankrupt, so GDP is a bigger issue for them. The US, not so much - they can print their own currency and issue more debt to cover their debt (perhaps not the wisest sounding strategy but it will get them through the crisis). That's why no-one batted an eyelid about the US GDP and debt until such time as they neared their debt ceiling, because if they hit their debt ceiling then they default of course. My how the media picked up that story and it became the biggest issue! 

Of course the US was always going to raise its' debt ceiling, as it has for the last 50 years+ (it's been raising its' debt ceiling almost once every year) so this is nothing new. There is even room in the American Constitution that the president can veto both houses and raise the debt limit (of course support from both parties is preferred, but don't think the president wouldn't hesitate to use that law to avert a default).

So the PIIGS and the US should not be compared regarding GDP - they both have fundamentally different economic structures. 

Make no mistake - I do not think either the PIIGS or the US are ok, both have severe economic issues they need to muddle through. Both will experienced depressed or negative growth (read: recession) over the coming years. A default of the PIIGS will freeze up credit markets again and drive a 'flight to safety' resulting in the YEN, AUD, gold and silver to rise, similar to the GFC. 

A default in the US would be quite catastrophic, but it's not going to happen because they can (and will!) print their own money. My concern is not the recession or slow growth - my concern is the inflation that's going to occur. We now have $2.3 trillion USD about to flow into the global monetary system - if you understand economics and money, you'll know that this means one thing: inflation. With $2.3 trillion USD that amounts to a LOT of inflation - I'll be holding some cash to buy assets on the cheap but for now it's go-go asset purchases.


----------



## sptrawler (5 August 2011)

Good summary Kurwa, I agree completly, the trick is timing there is no point in purchasing an asset that falls another 30% in value.
We always lag behind the U.S and Europe and the housing correction they have had is still to happen here. The government with their stupid policy on the run, has caused a nervousness in the economy and a crash on the world share markets will turn that into panic.
Picking the time to enter the markets is the trick, hopefully the learned members on the forum will have some tips.


----------



## KurwaJegoMac (5 August 2011)

sptrawler said:


> Good summary Kurwa, I agree completly, the trick is timing there is no point in purchasing an asset that falls another 30% in value.
> We always lag behind the U.S and Europe and the housing correction they have had is still to happen here. The government with their stupid policy on the run, has caused a nervousness in the economy and a crash on the world share markets will turn that into panic.
> Picking the time to enter the markets is the trick, hopefully the learned members on the forum will have some tips.




The thing about markets is that you can never pick the top or bottom, nor can you forecast the future. A lot of people delude themselves in thinking that they can predict a bottom or top or where the next level will be. News, information and sentiment changes on a daily basis - I know a lot of people got caught with their pants down near the bottom of the GFC and missed a lot of the good gains. Likewise many got caught with their pants down during the peak leading to the GFC.

I'm a Technical Analyst, preferring analysis of the charts when I buy stocks. There's only one time I've ever switched to fundamental analysis (macro-fundamental if you will) and that was during the GFC. I was buying Aussie banks on the cheap - picking up bargains like ANZ at $15. I'm no "buffet" or particular expert at fundamental analysis (in fact I dislike fundamental analysis) but even I can see that a bank trading at 7 times forecasted earnings (including provisions and revised earnings estimates) with great dividends is a no-brainer for a 10 year + investment.

Right now it's trading below $19, so I'm sure you can guess where i'll be putting in more funds soon. While I cannot forecast the future and time the bottom, I sure as hell know a bargain when I see one. 

As I've mentioned before, the 2nd opportunity for bargains is fast approaching. Enjoy.


----------



## Calliope (5 August 2011)

*This Time it's Serious.*



> And for all those who talk about a soft landing for Australia? We are one of the most exposed nations on earth, a small economy that relies extensively on exports and trade. As for all those who reckon we have "decoupled" from America and that our relationship with China will save us, you are partly correct. But China is tied to the US courtesy of its huge exposure to American debt. That's only one degree of separation.




http://www.businessday.com.au/business/this-time-its-serious-20110805-1ie4t.html#poll


----------



## sptrawler (9 August 2011)

Well the Dow at 10800, should be some buying opportunities comming up this week.


----------



## basilio (9 August 2011)

Laughing as you sink.. A lighter look at lengthening losses.

http://www.youtube.com/watch?v=NOzR3UAyXao


----------



## Julia (9 August 2011)

So funny, thanks basilio.  Tragically true, though.


----------



## sptrawler (13 August 2011)

sptrawler said:


> And so the closures continue, add to this the flow on effect of the carbon tax fallout to unemployment and the gloom deepens.
> http://www.smh.com.au/business/more-retail-woes-premier-shuts-50-fashion-shops-20110725-1hw37.html
> Wonder who will be next?




The unemployment has got to start ramping up. Indicators are not looking good.

http://www.theage.com.au/business/more-empty-shops-in-cbd-20110812-1iqw9.html


----------



## explod (14 August 2011)

This bloke is epic and finally something on the TV media.

http://www.youtube.com/watch?v=OlSd9OURbCE&feature=related

But will someone get into power to stop the tide.  I don't think so, the big crash will be stalled as long as possible in my view and then it will indeed be epic.


----------



## Smurf1976 (14 August 2011)

sptrawler said:


> The unemployment has got to start ramping up. Indicators are not looking good.



According to that article there is actually a shop in Melbourne that measures all of 1.5 square metres. Unless it's staffed by mice selling exercise wheels and blocks of cheese then it seems a tad small to me.


----------



## Amalgam (15 August 2011)

Smurf1976 said:


> According to that article there is actually a shop in Melbourne that measures all of 1.5 square metres. Unless it's staffed by mice selling exercise wheels and blocks of cheese then it seems a tad small to me.




Mice selling exercise wheels? Close, but it sounds like they're referring to the one of very many (and tiny!) foreign exchange booths dotted around the city.


----------



## Smurf1976 (15 August 2011)

Amalgam said:


> Mice selling exercise wheels? Close, but it sounds like they're referring to the one of very many (and tiny!) foreign exchange booths dotted around the city.



OK, that makes sense although that booth is a bit smaller than my toilet (which I just measured to make sure). As for the mice, even they would probably find it a tad cramped in there after a while I'd think. Mine likes to go for a run around every now and then.


----------



## Glen48 (16 August 2011)

Chinese are getting a phony divorced ..so they can buy more property instead owning one so the boom continues and china's property market is well above USA so will be a bigger crash.


----------



## sptrawler (16 August 2011)

Everyone may be talking it up and there was profits to be made last week. But we are far from out of the woods.

http://www.theage.com.au/business/w...tar-fades-as-growth-skids-20110816-1ivxj.html

If Germans do what has happened in Australia, it won't go well for Europe.

Forgot to mention they are the only ones with money


----------



## Wysiwyg (16 August 2011)

sptrawler said:


> If Germans do what has happened in Australia, it won't go well for Europe.
> 
> Forgot to mention they are the only ones with money



That's it. Other countries too strapped for cash to buy their stuff.


----------



## sptrawler (21 August 2011)

sptrawler said:


> The unemployment has got to start ramping up. Indicators are not looking good.
> 
> http://www.theage.com.au/business/more-empty-shops-in-cbd-20110812-1iqw9.html




This really looks as though it is only starting for us, we certainly require China to keep kicking goals, any bad news from them will pull our plug. As they say cash is king, be selective

http://www.theage.com.au/business/jobs-under-pressure-20110820-1j3ls.html


----------



## sptrawler (9 September 2011)

We are not out of the woods, by a long way.

http://www.smh.com.au/business/world-business/obama-unveils-us447b-jobs-package-20110909-1k0ji.html


----------



## Dutchy3 (9 September 2011)

Me ... looking like another leg down as early as middle / late next week.


----------



## Boggo (9 September 2011)

sptrawler said:


> We are not out of the woods, by a long way.
> 
> http://www.smh.com.au/business/world-business/obama-unveils-us447b-jobs-package-20110909-1k0ji.html






Dutchy3 said:


> Me ... looking like another leg down as early as middle / late next week.




Me too, we could lose another 1500 points off the XAO !


----------



## So_Cynical (9 September 2011)

Boggo said:


> Me too, we could lose another 1500 points off the XAO !




That's just bollocks...bet you 100 bucks we don't.  
--
You know it could look like some posters in this thread are actively down ramping...seeking to take advantage of the weak willed and financial uneducated.


----------



## sptrawler (9 September 2011)

So_Cynical said:


> That's just bollocks...bet you 100 bucks we don't.
> --
> You know it could look like some posters in this thread are actively down ramping...seeking to take advantage of the weak willed and financial uneducated.




I don't know about Boggo, but I would not be suprised to see the all ords at 3800 again in the next 6 months.
Nothing to do with ramping just applying logics to the U.S economy.

http://www.nytimes.com/2011/09/09/b...no-new-aid-for-economy.html?_r=1&ref=business

You can't tell people to spend when they are "packing" themselves.


----------



## Boggo (10 September 2011)

So_Cynical said:


> You know it could look like some posters in this thread are actively down ramping...seeking to take advantage of the weak willed and financial uneducated.



Do you seriously think that the posters on here are going to influence the overall market, they tried their best to save PEN when it fell through support at 12 cents.





sptrawler said:


> I don't know about Boggo, but I would not be suprised to see the all ords at 3800 again in the next 6 months.



Until it turns up, breaks up through 4500, retests that level for support and then continues on its way up I am looking at 3700 being a downside possibility.


----------



## LifeChoices (10 September 2011)

^^+1

FFS So_Cynical read the title of this thread. Obviously most of the people contributing to it have theories of what's going to happen.

I know, start your own thread, hey, I'll even name it for you: "Who thinks we are heading for the mother of all booms?"


----------



## Boggo (10 September 2011)

Here's a 1 minute chart of 100 points being wiped off the UK market in less than 1 hour !
It wouldn't take much to achieve a significant fall in any market.

(click to expand)


----------



## So_Cynical (10 September 2011)

LifeChoices said:


> ^^+1
> 
> FFS So_Cynical read the title of this thread. Obviously most of the people contributing to it have theories of what's going to happen.
> 
> I know, start your own thread, hey, I'll even name it for you: "Who thinks we are heading for the mother of all booms?"




Why must people always jump to the extremes?

I'm on the record in this forum from 15 months ago (approx) as predicting a sideways market and ive been 100% spot on....and currently see no reason to change that view because nothings changed.

Boggo's 2600 is outside my predicted range...and is not realistic IMO as it means a fall of another, what 35% ~ BHP at under $26 and CBA under $31 .. not without civil war in  China.


----------



## Boggo (10 September 2011)

Boggo said:


> Until it turns up, breaks up through 4500, retests that level for support and then continues on its way up I am looking at *3700* being a downside possibility.






So_Cynical said:


> Boggo's *2600* is outside my predicted range...




Huh ??


----------



## LifeChoices (10 September 2011)

Boggo said:


> Me too, we could lose another 1500 points off the XAO !




Oh, I see. 1500 down from here could be interpreted at 2600. Yeah, can't see it going that far down either - but I guess you never know.


----------



## Boggo (10 September 2011)

Boggo said:


> Me too, we could lose another *1500* points off the XAO !






Boggo said:


> Until it turns up, breaks up through 4500, retests that level for support and then continues on its way up I am looking at *3700* being a downside possibility.






LifeChoices said:


> Oh, I see. *1500* down from here could be interpreted at 2600. Yeah, can't see it going that far down either - but I guess you never know.




Sorry guys, my error, the 1500 should have read 500, ie ~4200 to 3700.


----------



## Aussiejeff (10 September 2011)

So_Cynical said:


> Why must people always jump to the extremes?
> 
> I'm on the record in this forum from 15 months ago (approx) as predicting a sideways market and ive been 100% spot on....and currently see no reason to change that view because nothings changed.
> 
> Boggo's 2600 is outside my predicted range...and is not realistic IMO as it means a fall of another, what 35% ~ BHP at under $26 and CBA under $31 .. *not without civil war in  China*.




How about a _*World Currency War*_?

Time to don tin hat again...


----------



## IFocus (10 September 2011)

So_Cynical said:


> Why must people always jump to the extremes?
> 
> I'm on the record in this forum from 15 months ago (approx) as predicting a sideways market and ive been 100% spot on....and currently see no reason to change that view because nothings changed.
> 
> Boggo's 2600 is outside my predicted range...and is not realistic IMO as it means a fall of another, what 35% ~ BHP at under $26 and CBA under $31 .. not without civil war in  China.





The German voters refusing to stump up the Euro, then seeing a disorderly default of Greece leading to Greece banks becoming instantly bankrupt, bond market then freezes half or more of the euro counties out of the market (its really happened already) leading to an instant world wide banking contagion that sovereigns cannot bail out.


----------



## Garpal Gumnut (10 September 2011)

It is going to get very nasty over the next 4 weeks. I am out on Monday and in to 100% cash.

gg


----------



## Julia (10 September 2011)

LifeChoices said:


> FFS So_Cynical read the title of this thread. .
> 
> I know, start your own thread, hey, I'll even name it for you: "Who thinks we are heading for the mother of all booms?"



 Might not be many contributions.


----------



## basilio (15 September 2011)

As the Greek debt crisis unfolds might be worth reviewing what happened in 1931 when the Australian Bank Credit Anstalt collapsed

http://www.businessweek.com/magazine...6012481756.htm


----------



## sptrawler (23 September 2011)

Well it looks like the roller coaster has hit the big descent down.


----------



## doogie_goes_off (23 September 2011)

Today is gonna be a nasty one, maybe 10-15% off most resource stocks. Hold on to your hats Wayne Swan wont save you now.


----------



## medicowallet (23 September 2011)

Garpal Gumnut said:


> It is going to get very nasty over the next 4 weeks. I am out on Monday and in to 100% cash.
> 
> gg




Good call GG

MW


----------



## Tysonboss1 (23 September 2011)

doogie_goes_off said:


> Today is gonna be a nasty one, maybe 10-15% off most resource stocks. Hold on to your hats Wayne Swan wont save you now.






medicowallet said:


> Good call GG
> 
> MW




What do you mean Good call, the resource sector is down about 3%. No where near 10% - 15%.


----------



## sptrawler (23 September 2011)

Tysonboss1 said:


> What do you mean Good call, the resource sector is down about 3%. No where near 10% - 15%.




Then it is still a good opportunity to get out, the storm clouds are growing not dispersing. At the moment everyone is starting to realise money printing isn't the answer, so it follows a recession is required.


----------



## Tysonboss1 (23 September 2011)

sptrawler said:


> so it follows a recession is required.




Maybe it is, maybe it isn't, who cares.

Even if a recession happened, we would eventually be on the other side. 

And the majority who sold out of the worlds best assets to the few who could see far enough into the future, would have enriched the few beyond their wildest dreams.

I don't know about you, But I prefer to "BUY in Gloom, sell in Boom" rather than the other way around, I have an all weather Investment operation, so I don't mind the odd storm or the odd over reaction to whether predictions.

Cheers,
TB


----------



## sptrawler (23 September 2011)

Tysonboss1 said:


> Maybe it is, maybe it isn't, who cares.
> 
> Even if a recession happened, we would eventually be on the other side.
> 
> ...




Agree completely, it just depends whether you require the money e.g retired or are able to ride through it. But good opportunities will present themselves.


----------



## howmanyru (23 September 2011)

Hardly catastrophic so far today, no doubt people are expecting a bounce Monday ?


----------



## Auslad (23 September 2011)

According to the Research Company marketsdna.com, global markets will fall completely though the floor next week due to Comet Elenin  aligning between the Earth and the Sun on the 26th September. There is so much conjecture about Comet Elenin, at this point of time it is hard to distiguish between fact and fiction. Either way, we all will know the outcome early next week.

http://www.youtube.com/watch?v=0p89rPQkZPM


----------



## Tysonboss1 (23 September 2011)

sptrawler said:


> Agree completely, it just depends whether you require the money e.g retired or are able to ride through it. But good opportunities will present themselves.




yes, it sounds crazy.

but If you need the money, Well then you should really hold money. If your retired and are going to rely on drawing down capital (because your don't have enough to live of dividends etc) you should hold a large portion in cash to tide you over tuimes of volitility.


----------



## McLovin (23 September 2011)

Auslad said:


> According to the Research Company marketsdna.com, global markets will fall completely though the floor next week due to Comet Elenin  aligning between the Earth and the Sun on the 26th September. There is so much conjecture about Comet Elenin, at this point of time it is hard to distiguish between fact and fiction. Either way, we all will know the outcome early next week.
> 
> http://www.youtube.com/watch?v=0p89rPQkZPM




I guess that's what they call tail risk! Boom tsch!!!


----------



## basilio (27 September 2011)

Interestingly candid interview with a money market dealer in London who is having wet dreams about the next recession/depression.

It will be a fantastic opportunity to make money.....

http://www.guardian.co.uk/business/poll/2011/sep/27/shocked-stock-market-trader-alessio-rastani


----------



## sptrawler (4 October 2011)

Commodities are starting to get hit now, can't wait for the carbon tax to get through.
Great buying oppurtunity at 3700, just pick your long term position, they will be all cheap. IMO


----------



## Boggo (4 October 2011)

sptrawler said:


> Great buying oppurtunity at 3700, just pick your long term position, they will be all cheap. IMO




As a famous politician once said "Please Explain"


----------



## sptrawler (4 October 2011)

Well bogo, long term the underlying demand for raw materials will not diminish.
The current market volatility is more to do with money markets, dodgy loans and the money printing excercise.
We are getting caught up in it, however I see it as an opportunity to purchase long term growth shares at prices that are cheap relative to underlying asset.
The 3700 is a strong resistance and support point, which I feel we will have trouble falling through.
These are only my opinions.


----------



## wayneL (4 October 2011)

sptrawler said:


> Commodities are starting to get hit now, can't wait for the carbon tax to get through.
> Great buying oppurtunity at 3700, just pick your long term position, they will be all cheap. IMO




Define "cheap"


----------



## sptrawler (4 October 2011)

wayneL said:


> Define "cheap"




Well that is the subjective question. 
If everyone had the same definition of "cheap" you wouldn't have any sellers or buyers. 
Some use N.T.A some use P.E, some use R.O.E, some use dividend, some use a combination of these and other indicators.


----------



## wayneL (4 October 2011)

sptrawler said:


> Well that is the subjective question.
> If everyone had the same definition of "cheap" you wouldn't have any sellers or buyers.
> Some use N.T.A some use P.E, some use R.O.E, some use dividend, some use a combination of these and other indicators.




Those might be pretty slippery vectors if one believes a recession is imminent.


----------



## Boggo (4 October 2011)

sptrawler said:


> Great buying oppurtunity at 3700, just pick your long term position, they will be all cheap. IMO






sptrawler said:


> Well bogo, long term the underlying demand for raw materials will not diminish.
> The current market volatility is more to do with money markets, dodgy loans and the money printing excercise.
> We are getting caught up in it, however I see it as an opportunity to purchase long term growth shares at prices that are cheap relative to underlying asset.
> The 3700 is a strong resistance and support point, which I feel we will have trouble falling through.
> These are only my opinions.




I sort of see what you are saying but in reality the only cheap stocks are the ones that are down after the market has hit the bottom and is on the way up.

Everything could be considered "cheap" compared to where it was, but by being in line with an overall regressive market is it cheap or just where it should be.

At the moment the market is on the slide and what is "cheap" today by whatever way you measure it is likely to be even cheaper tomorrow or next week.

There are numerous posts on here of individuals trying to outwit the current market, posts such as PTM being cheap when it was $4.60, it is now $3.60, what is it now then, ultra cheap ? 

The way I read your first statement is 'Buy at 3700, hold onto them and they will get cheaper', I suspect you may be right.
I do agree that 3600 to 3700 may be an area of interest on the XAO but I wouldn't be thinking about jumping back in on the first bounce, in my case anyway the reversal would require more than just a few hundred points to get my funds out of their current cosy and safe place of residence.

Just my


----------



## basilio (5 October 2011)

Things not looking so good in Europe. Dexia bank in Belgium seems in free fall.

Came across an analysis of the bad/disastrous options facing Europe in the event of Greek default.

How could Australia not be seriously affected by such events ?


> *Dark visions of a Greek default*
> 
> John Hempton
> 
> ...



http://www.businessspectator.com.au...rrency--pd20110928-m596d?opendocument&src=msp

http://www.guardian.co.uk/global/blog/2011/oct/04/european-debt-crisis#block-14


----------



## sptrawler (7 October 2011)

The indicators are all starting to point down. 

http://www.perthnow.com.au/business...-dunn-bradstreet/story-e6frg2qu-1226124630624

Very interesting that manufacturing business start ups have averaged 700/ year for the last three years and only 14 in the first 6months of 2011.


----------



## Starcraftmazter (10 October 2011)

Over the next months and years things will go from bad to worse to a nightmare. 

The only thing left is trying to predict the _velocity_ with which things get worse.


----------



## basilio (24 October 2011)

I'm just wondering... and maybe this all sounds crazy.

As the situation in Greece and Europe looks grimmer we havn't actually seen any real signs of panic in the market (well not recently). In fact it is looking surrealy buoyant.

Is it possible that all the big investors are trying to avoid starting a panic in the certain knowledge that a stock market crash* in itself* will be calamitous let along having to deal with the inevitable fallout of debt reconstruction/default in Europe ? Is it possible  a few government are either having direct talks with traders or evening quietly buying shares to keep up some liquidity and confidence ?

Given what we know about traders activities, hedge funds and short selling I half thought last Friday or today would have been close to panic.  But no ?

Any thoughts ?  Just fantasy ?


----------



## Starcraftmazter (24 October 2011)

basilio said:


> As the situation in Greece and Europe looks grimmer we havn't actually seen any real signs of panic in the market (well not recently). In fact it is looking surrealy buoyant.




We've effectively had somewhat of a crash since April, it's just been rather slow and had quite a few little rallies here and there. But overall, market is down what, over 20% give or take depending on whether we are rising or dropping?

I think the markets want certainty about Greece more than anything. If Greece defaults, but they can safeguard banking institutions in EU and elsewhere, I do not see a major crash ala GFC. That's a pretty big if though, nobody knows what the off balance sheet derivative exposure to Greece is.



basilio said:


> Is it possible that all the big investors are trying to avoid starting a panic in the certain knowledge that a stock market crash* in itself* will be calamitous let along having to deal with the inevitable fallout of debt reconstruction/default in Europe ?




Well I think a lot of them have already liquidated quite a lot of their holdings since April, and quite a bit of cash is sitting on the sidelines waiting to jump in if Greece is resolved. But I don't think things are perceived to be bad enough for a crash yet, everyone is hoping (praying?) for a solution.



basilio said:


> Is it possible  a few government are either having direct talks with traders or evening quietly buying shares to keep up some liquidity and confidence ?




I don't think so. Even if you take very big institutions, there are too many of them, and I don't see how the governments could influence them. Governments are pretty weak in general, it is them who get influenced not the other way around.



basilio said:


> Given what we know about traders activities, hedge funds and short selling I half thought last Friday or today would have been close to panic.  But no ?




Several EU countries have banned short selling, and Europe I think last week banned uncovered CFD positions or something to that extent? I don't exactly remember so someone please correct me if I'm wrong.

The point is however, Europe has been legislating furiously trying to ban all shorting activities to prevent what you are describing here from happening.


----------



## Aussiejeff (21 November 2011)

Apparently, the silly Chinese are predicting a BIG slump. They call it a "long term global economic recession".

What would they know?



> *The world economic situation is “extremely severe,” *China’s Wang said at a financial work meeting in Hubei province, state news agency Xinhua reported late on Nov. 19. *“The global economic recession triggered by the international financial crisis will be long-term,” *Xinhua cited Wang as saying.



http://www.bloomberg.com/news/2011-...-sees-prolonged-global-slowdown-economy.html#

Oh well. Party on, mining boom and all that....

LOL


----------



## sptrawler (22 November 2011)

Aussiejeff said:


> Apparently, the silly Chinese are predicting a BIG slump. They call it a "long term global economic recession".
> 
> What would they know?
> 
> ...




Thanks for sharing that Aussiejeff, Gerry Harvey should have a read it might stop him talking up the economy.LOL


----------



## Aussiejeff (24 November 2011)

sptrawler said:


> Thanks for sharing that Aussiejeff, Gerry Harvey should have a read it might stop him talking up the economy.LOL




Worse to come?......overnight German Debt Sale Fail.... 



> *Debt crisis now at German doorstep
> Belgian and French yields jump on Dexia bailout worries*
> 
> FRANKFURT (MarketWatch) ”” _An auction of German government bonds technically failed Wednesday, underlining fears that the long-running crisis in European sovereign debt now threatens the core of the euro zone. _
> ...



http://www.marketwatch.com/story/po...risis-hitting-core-2011-11-23?link=MW_popular

They need.....

SuuuuuuperrrrSchwan - The World's Greatest Treasurer, to sort them out.

LOL.

Tin hats on?


----------



## joea (24 November 2011)

Hi
I am wondering if this thread is just discussing the small issues.
Are there bigger issues?  I think China and their currency is the issue!

http://www.fas.org/sgp/crs/row/RS21625.pdf

joea


----------



## explod (24 November 2011)

joea said:


> Hi
> I am wondering if this thread is just discussing the small issues.
> Are there bigger issues?  I think China and their currency is the issue!
> 
> ...




Yes, the big one will be Government and private company bonds.  Interesting our Government is easing business into this form of capital raising as we speak.   And the failure of Germany to sell all their bonds in the last day or so ought to send a chill down some spines when it all sinks in.

Lots of info on the history of bond issues and the Great Depression which I think are worth wading through, just hit google.  

http://www.futurecasts.com/Depression_bottom-1932-1933.html

The following however is Eric Sprott being interviewed on Kingworld News:



> With stocks plunging and gold and silver still consolidating, today King World News interviewed billionaire Eric Sprott, Chairman of the $10 billion strong Sprott Asset Management.  KWN wanted to Sprott’s take on the ongoing financial crisis and where we are headed from here.  When asked about the German bond auction, Sprott responded, “The results were that they (Germany) only sold about 65% of the issue on offer.  Rates went up a little, but the fact that the Germans, who would have been regarded as the number one credit in Europe, couldn’t sell, I think it was a $5 billion euro issue, and they couldn’t sell it, I mean it’s truly shocking.”
> 
> “What does it mean when some of these other governments are going to try to raise money that the number one credit (in Europe) can’t raise money.  So I think it’s a very important signpost for us all, as we look at the reeling that’s going on amongst sovereigns in Europe, as we realize that the pressures in the banking system in Europe are just (so) intense.  We can see that by the deposits/withdrawals and the borrowings from the ECB and so on.
> 
> ...




In the period 1930/33 most bonds became worthless.

Anyhoooow, we live in intersting times.


----------



## explod (24 November 2011)

Missed a bit at the end of Eric Sprots take, so read it onwards here.  Found for some reason I could not edit, or more correctly, add it into the quote:




> When asked how this portion of the financial crisis will compare to that of 2008 and 2009, Sprott replied, “I think it’s going to be a lot worse because it took a certain amount of money to bail out Lehman and all of the counterparties to Lehman.  But when you have governments and sovereigns and major banks that have these issues, I just can’t imagine there is enough money to bail it out.
> 
> 
> 
> ...


----------



## young-gun (25 November 2011)

explod said:


> Missed a bit at the end of Eric Sprots take, so read it onwards here.  Found for some reason I could not edit, or more correctly, add it into the quote:




hallelujah, about time someone with some credibility put it as blunt as it is.(i havent heard much of this guy, but after a bit of reading on google he appears credible)

thanks for the interview explod, i see more is set to be released soon


----------



## Aussiejeff (26 November 2011)

130 pt slump in last 3 hrs of trading in short Black Friday DOW session to finish down -25pts.

Hmmm. Just Bad Black Friday karma? Or jitters after Italian _short term_ debt bonds sold at near 7% IR's overnight?

How UK banks managed to soar 3-5% last night in the face of all this & put a positive spin on their market is beyond me.. certainly didn't impress the Yanks a few short hours later.


----------



## sptrawler (26 November 2011)

For what its worth, which isn't much. I think the European countries are going to have to go back to their own currencies and cop a flogging.
Maybe England wasn't stupid when it kept the pound stirling.


----------



## young-gun (26 November 2011)

Starcraftmazter said:


> Over the next months and years things will go from bad to worse to a nightmare.
> 
> The only thing left is trying to predict the _velocity_ with which things get worse.




mo star give it mid 2012 and it will have hit the fan, it honestly is actually looking very scary indeed.


----------



## Smurf1976 (26 November 2011)

Taking a step back and looking at the world as a whole, it would seem that just about every significant country either has had problems for quite a long time (Eg USA), has problems due to factors other than purely the markets etc (eg Japan), is at war or at credible risk of being at war, is part of the EU and going down the plug hole at an alarming rate, or is simply an upstream supplier to these countries (China, Australia).

There doesn't seem to be much good news unfortunately and as a consumer I find it hard to ignore the storm which seems to be brewing. If others think likewise and keep their wallets shut then there goes the Aussie economy too. (Actually, if you exclude mining then I'd argue that we're not doing that well as it is, but that's another story).

One thing which does stand out however is the price of oil at roughly $100 per barrel. That one has me thinking:

1. Just inflation or the market expecting inflation?
2. Some sort of "war premium" in expectation of disruption to supplies?
3. Despite all the bad news oil consumption is holding up and oil is actually in relatively short supply on world markets?
4. The oil price is about to crash and this situation is temporary?

Any thoughts? That's the one thing that really doesn't seem to fit with the overally economic situation right now. The wheels seem to be falling off the economy and yet oil prices remain virtually unchanged at a post-2008 high. Maybe this should go in an oil thread, but I do think it has relevance to the overall situation - WHY is the oil price behaving this way? Any thoughts?


----------



## Aussiejeff (26 November 2011)

Smurf1976 said:


> Taking a step back and looking at the world as a whole, it would seem that just about every significant country either has had problems for quite a long time (Eg USA), has problems due to factors other than purely the markets etc (eg Japan), is at war or at credible risk of being at war, is part of the EU and going down the plug hole at an alarming rate, or is simply an upstream supplier to these countries (China, Australia).
> 
> There doesn't seem to be much good news unfortunately and as a consumer I find it hard to ignore the storm which seems to be brewing. If others think likewise and keep their wallets shut then there goes the Aussie economy too. (Actually, if you exclude mining then I'd argue that we're not doing that well as it is, but that's another story).
> 
> ...




Apparently, there is currently an increasing shortage of light distillate (gas oil or diesel) worldwide - covered in the latest WOO (World Oil Outlook). A hefty tome indeed, but worth a browse. http://www.opec.org/opec_web/en/publications/340.htm

This shortage is going to run over at least 10 years or so. There's a graph in there somewhere that shows a widening gap between expected pump prices for petrol vs diesel. 

IMO this is a very BAD outlook for Australian transport sector - and anyone with a diesel (notice how diesel is currently +150c ltr and climbing, while UL is around 139+ and falling). 

Hmmm.....

aj


----------



## Glen48 (27 November 2011)

See the editorial under the last picture. That says it all!

The Emma Maersk, part of a Danish shipping line, is shown in the photos below.






What a ship....no wonder 'Made in China ' is displacing North American made goods big time.
This monster transports goods acr
	

		
			
		

		
	






	

		
			
		

		
	
oss the Pacific in just 5 days!!
This is one of three ships presently in service, with another two ships commissioned
to be completed in 2012.    







        These ships were commissioned by Wal-Mart to get all their 
goods and stuff from China ... They hold an incredible 15,000 
containers and have a 207 foot deck beam!!  The full crew is just 
13 people on a ship longer than a US Aircraft Carrier (which has a 
crew of 5,000.  With its 207' beam it is too big to fit through the 
Panama or Suez Canals ...




    It is strictly Transpacific. Cruise speed: 31 knots. 

The goods arrive 4 days before the typical container ship (18-20 
knots) on a China-to-California  run.  91% of Wal-Mart products are 
made in China. So this behemoth is hugely competitive even 
when carrying perishable goods.  




The ship was built in five sections. The sections floated
together and then welded. 



The command bridge is higher than a 10-story building and has 
11 cargo crane rigs that can operate simultaneously unloading 
the entire ship in less than two hours. 






                Additional info:

                Country of origin - Denmark
                     Length - 1,302 ft
                     Width - 207 ft
                     Net cargo - 123,200 tons 
                     Engine - 14 cylinders in-line diesel engine (110,000 BHP) 
                     Cruise Speed - 31 knots



                     Cargo capacity - 15,000 TEU (1 TEU = 20 cubic feet)
                     Crew - 13 people !
                     First Trip - Sept. 08, 2006 
                     Construction cost - US $145,000,000+

Silicone painting applied to the ship bottom reduces water   
resistance and saves 317,000 gallons of diesel per year.

















                Editorial Comment!


A recent documentary in late March, 2010 on the History 
Channel noted that all of these containers are shipped back to 
China , EMPTY. Yep, that's right.  
We send nothing back on these ships. 
What does that tell you 
about the current financial state of this country? 
So folks, just keep on buying those imported goods (mostly gadgets) until you run out
of money.  Then you may wonder what the cause of unemployment
(maybe even your job) in the U.S.. and Canada and even in Australia might be????

Enough said!!!

Soon to worth  $1.20 a KG?


----------



## sptrawler (27 November 2011)

Glen48 said:


> Editorial Comment!
> 
> 
> A recent documentary in late March, 2010 on the History
> ...




Good pick up Glen, like we have said earlier, it is exactly what happened to British manufacturing in the 1960's. Due on that occassion to the industrialisation of Japan.
The U.S has a lot of adjusting to do.


----------



## Glen48 (27 November 2011)

Guess it depends on will we have a depression or not .. most think no because it means they don't have to worry the feds will look after them ...but what IF???
This is just another case of bad management and greed


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## IFocus (27 November 2011)

Guys this is the biggy 

German bond market

http://www.abc.net.au/news/2011-11-27/talking-point/3697676?section=business


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## Glen48 (27 November 2011)

Car sales in USA are  up 6% because they count the amount of cars leaving he factories.
 Cars yard now hold 15% more cars.


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## VSntchr (27 November 2011)

Some very interesting stuff in here guys, keep it up!

That ship is almost beyond belief!!


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## sptrawler (27 November 2011)

Glen48 said:


> Car sales in USA are  up 6% because they count the amount of cars leaving he factories.
> Cars yard now hold 15% more cars.




Have you seen the prices they are flogging off Jeep Grand Cherokees for, state of the art 3litre diesel with air suspension and as much fruit as a $80,000 Prado.
On the road, drive away for less than $60,000.
That is with a 175Kw 550Nm diesel as opposed to the Prado 128Kw 400Nm.
The yanks are definately sh!!!ting themselves, I think it is a bit like the poms. Too little too late, the horse has bolted.
But there should be some great buying on all fronts as this plays out.


----------



## sptrawler (27 November 2011)

The other thing that should be interesting is what happens to interest rates on deposits, as inter bank lending freezes.
This is the reason the government is sh!!!!ting itself and trying to get its books in order, they can't back up the banks if they are in debt. 
Especialy when they were in surplus 4 years ago, we are only a China hickup away from having difficulty sourcing overseas funding.IMO


----------



## Julia (27 November 2011)

sptrawler said:


> The other thing that should be interesting is what happens to interest rates on deposits, as inter bank lending freezes.
> This is the reason the government is sh!!!!ting itself and trying to get its books in order, they can't back up the banks if they are in debt.
> Especialy when they were in surplus 4 years ago, we are only a China hickup away from having difficulty sourcing overseas funding.IMO



Good to see one person at least is recognising this.  The banks have been very complacent recently on the basis of their increased local deposits.  Let's see how that complacency goes if there's a global credit squeeze.


----------



## drsmith (27 November 2011)

IFocus said:


> Guys this is the biggy
> 
> German bond market
> 
> http://www.abc.net.au/news/2011-11-27/talking-point/3697676?section=business



That's a few days old, so at least partially digested by markets.

http://www.theaustralian.com.au/bus...rope-debt-crisis/story-e6frg916-1226204294573

Ted Spread though is inching up, but no where near the catasthropic levels of late 2008, as yet.

http://www.bloomberg.com/apps/quote?ticker=.TEDSP:IND


----------



## Garpal Gumnut (27 November 2011)

There is only one statistic against a slump occurring and that is that every man and his dog is predicting one. Goyles too.

Usually when the herd is at its gloomiest, a pickup occurs.

gg


----------



## sptrawler (27 November 2011)

Julia said:


> Good to see one person at least is recognising this.  The banks have been very complacent recently on the basis of their increased local deposits.  Let's see how that complacency goes if there's a global credit squeeze.




Yes people aren't realising the mining "boom" is all that is keeping us from being in the same basket as other countries with deficits and having trouble sourcing funds.
The goon show over the last four years has squandered our surplus and now has to ramp taxes to pay for their incompetence. Then have audacity to say they have steered us through with fiscal management.
If people swallow that they deserve all they get, anyway off subject a bit, sorry.
If China reduces intake of our commodities, with the gearing of our junior mining sector, sh!!!ts are trumps.


----------



## Glen48 (27 November 2011)

The cash for clunkers would have push car sales up, trouble is the clunkers had to have the engine destroyed   by starting it and tipping Aluminium Oxide into it which seized every things , trouble is no car wreckers would buy them because the engine was the main source of cash for them.

One in two home owners are under water in USA and the market is still tanking.


----------



## Glen48 (28 November 2011)

http://www.marinetraffic.com/ais/
 The ship is now off the coast  of Africa so much for direct  to USA???


----------



## Smurf1976 (28 November 2011)

Glen48 said:


> The cash for clunkers would have push car sales up, trouble is the clunkers had to have the engine destroyed   by starting it and tipping Aluminium Oxide into it which seized every things , trouble is no car wreckers would buy them because the engine was the main source of cash for them.



A classic example of wealth destruction dressed up to look like something good.

Economically - why destroy something that is functional and has value.

Environmentally - the energy required to build a new car makes the whole "cash for clunkers" concept nothing more than a sad joke. Keeping existing cars running for the duration of their useful life makes far more environmental sense in most cases.


----------



## young-gun (29 November 2011)

Garpal Gumnut said:


> There is only one statistic against a slump occurring and that is that every man and his dog is predicting one. Goyles too.
> 
> Usually when the herd is at its gloomiest, a pickup occurs.
> 
> gg




if by herd you mean ASF users? 

most are completely oblivious to economic situations and news.

there is obviously plenty of investors out there(not to mention countless economists and forecasters) that think things are gonna be all-right here in good ol' aus(and the world), why else would you still have money in the market (long)

i agree with you in that when the crash happens it will come when everyone least suspects it, im failing to see when that time would arise at the moment though.


----------



## Glen48 (29 November 2011)

We should change the topic to Who knows there will be a slump/depression.
I give it 3 months


----------



## explod (29 November 2011)

Glen48 said:


> We should change the topic to Who knows there will be a slump/depression.
> I give it 3 months




I think we are there, what about "The Slump, how bad will it become"


----------



## Bill M (29 November 2011)

young-gun said:


> there is obviously plenty of investors out there(not to mention countless economists and forecasters) that think things are gonna be all-right here in good ol' aus(and the world), why else would you still have money in the market (long)




Hey young-gun there are reasons for everything. I subscribe to many investment newsletters and broker reports. Roughly about 70% of these reports suggest the markets are going down and that Europe's and USA's debt problems will signal long term pain for eveybody. The other 30% are quite the opposite, some citing that this is the time to be buying Aussie stocks. P/E's and dividends have never been so good and that they are sustainable, they say.

For me as a lifetime investor (NOT TRADER) have been through a few booms and busts, this one is no different. I am of the firm belief that buying good companies that pay good dividends when everyone else is heading for the exit doors (or margin calls) is a good idea. I have bought quite a lot of double digit dividend paying companies lately and all I care about is how hard my cash will work for me. Right now I have a portfolio that pays me 7% dividends (mostly franked), why on earth would I sell that to get 6% in a bank account and then pay TAX? To me it would be a backward step and on any market dips like last week I tend to buy more stock and go long. I have have no interest in short term fluctuations it's the rest of my life and the income I need that matters. I hope that clarifys why some people are long. I might add if the market does crash to 3100 on the all ords (like the 70% suggest) then I will be buying like there is no tomorrow, to me it will be the second best chance in a lifetime, cheers.


----------



## Julia (29 November 2011)

Hello Bill

So you don't mind seeing your capital investment diminishing?  
You don't consider it could be worthwhile to lock in your profits, sit aside in cash (8% available a couple of years ago), and buy back in after the falls?

I listened to an interesting discussion on ABC Radio last evening where one of the few people who accurately predicted and timed the GFC (he went totally to cash before it set in) and has also accurately forecast events since then, has suggested we could see the ASX go to 1000 points and that the bottom will not occur until around 2016.

He might be quite wrong.  But his track record so far and his background experience suggests it's worth listening to what he says.

I'm not at all trying to change your point of view.  I just don't especially agree with it when opportunity cost is taken into consideration.

If you have, say, $500,000 in capital investment, and that falls to less than half, is your dividend yield/franking actually going to make up the difference?


----------



## Glen48 (29 November 2011)

Depressions only come along every 70 -80 years so most have forgotten about them, Most know about boom/bust's and think this one will be this same but add 75 to 1930 we are due for the next one only the feds  keep printing money and stopping it happening.
 Read up  to Tulip mania delete Tulip and insert House prices.
Same store.


----------



## sptrawler (29 November 2011)

If you have $500,000 invested and interest rates drop to 1 - 2% as in U.K, Europe and U.S, you start to eat the principle. 
If the share price of a company drops to 20% of its current value, it will be a reflection of the companies earnings, therefore its dividends will drop with its earnings.
Having a rental property in a recession is o.k if the tenants keep their job and pay their rent.
There is no easy answer or fail safe way of protecting your capital. However there will be opportunity for those with cash.


----------



## VSntchr (29 November 2011)

Julia said:


> I listened to an interesting discussion on ABC Radio last evening where one of the few people who accurately predicted and timed the GFC (he went totally to cash before it set in) and has also accurately forecast events since then, has suggested we could see the ASX go to 1000 points and that the bottom will not occur until around 2016.
> 
> He might be quite wrong.  But his track record so far and his background experience suggests it's worth listening to what he says.




I watched and it was very interesting...thanks.


----------



## Bill M (29 November 2011)

Julia said:


> Hello Bill
> 
> So you don't mind seeing your capital investment diminishing?



Short term no.



> You don't consider it could be worthwhile to lock in your profits, sit aside in cash (8% available a couple of years ago), and buy back in after the falls?



If only! 8% has gone by the wayside a long time ago. I didn't act soon enough then and now it's down to 6% for 5 years.



> I listened to an interesting discussion on ABC Radio last evening where one of the few people who accurately predicted and timed the GFC (he went totally to cash before it set in) and has also accurately forecast events since then, has suggested we could see the ASX go to 1000 points and that the bottom will not occur until around 2016.




Another predictor, I got one in my inbox now telling me he has never seen such unbelievable valuations in the ASX in his lifetime. They are all full of sh*t, no one knows which way the market is going to go really.



> He might be quite wrong.  But his track record so far and his background experience suggests it's worth listening to what he says.



Same goes to the guy in my inbox predicting the opposite.



> I'm not at all trying to change your point of view.  I just don't especially agree with it when opportunity cost is taken into consideration.



Opportunity cost? 6% in UBANK now and you must pay tax on it. Real Estate hmm we worked this out before 3 to 4% return after tax. But my stocks are returning 7% tax paid, why would I swap into worse investments at precisely the wrong time? I do not need the capital I have invested in stocks, I have cash aside for emergencies and the stocks are a life time plan.



> If you have, say, $500,000 in capital investment, and that falls to less than half, is your dividend yield/franking actually going to make up the difference?



My dividends will never pay me $250,000 a year so the answer is no. But it isn't going to make a difference on my lifestyle as the dividends that I do get will still come in as they did during the recession of the early 90's and the crash of 2008 - 09. Short term capital loss is not something I dwell on or worry about. I buy when I see value, don't really care what others do. This has paid off for me in the past and most likely will pay off for me again. I am more prepared for GFC 2 than I was for GFC 1, the world will not end. BHP, WOW and CBA and many others will always be paying those dividend cheques (sorry direct deposits now) and that is why I am invested in the stockmarket, cheers.


----------



## Bill M (29 November 2011)

sptrawler said:


> If you have $500,000 invested and interest rates drop to 1 - 2% as in U.K, Europe and U.S, you start to eat the principle.
> If the share price of a company drops to 20% of its current value, it will be a reflection of the companies earnings, therefore its dividends will drop with its earnings.
> Having a rental property in a recession is o.k if the tenants keep their job and pay their rent.
> There is no easy answer or fail safe way of protecting your capital. However there will be opportunity for those with cash.




100% spot on ol mate. Just had some visitors from UK here. They said we were very lucky to get 6% for a 1 year term deposit. They said the best they could do was 2% in the UK, looks like capital eating time.


----------



## Julia (29 November 2011)

Bill M said:


> Short term no.
> 
> If only! 8% has gone by the wayside a long time ago. I didn't act soon enough then and now it's down to 6% for 5 years.



I wouldn't discount high rates becoming available again if the suggested global credit squeeze happens.  That 8% was only available for a very short time.  You had to be looking at e.g. infochoice regularly.



> Another predictor, I got one in my inbox now telling me he has never seen such unbelievable valuations in the ASX in his lifetime. They are all full of sh*t, no one knows which way the market is going to go really.



No, they don't.  No one does.  But if someone has accurately forecast events to date I'm prepared to listen to him.
Anyone who is currently predicting all will be just okey dokey has to be seriously off the planet imo.



> Opportunity cost? 6% in UBANK now and you must pay tax on it. Real Estate hmm we worked this out before 3 to 4% return after tax. But my stocks are returning 7% tax paid, why would I swap into worse investments at precisely the wrong time? I do not need the capital I have invested in stocks, I have cash aside for emergencies and the stocks are a life time plan.



OK.  If the knowledge that your capital investment is dropping all the time doesn't worry you, then the yield on many stocks is, I suppose, comforting.



Bill M said:


> 100% spot on ol mate. Just had some visitors from UK here. They said we were very lucky to get 6% for a 1 year term deposit. They said the best they could do was 2% in the UK, looks like capital eating time.



You can't really compare any features of the UK economy with that of Australia.
Our interest rates are much higher for reasons that absolutely don't apply in the UK.

If China stops being Australia's lifeline, we'll quickly see falling rates here also.

Btw, Bill, if you move your super into an allocated pension as soon as you can, you'll remove that pesky consideration of paying tax.

All the best.
Julia


----------



## sptrawler (30 November 2011)

I only wish I had moved from shares to Rabo bank when they were giving 8%, some people did.LOL


----------



## Bill M (30 November 2011)

Julia said:


> I listened to an interesting discussion on ABC Radio last evening where one of the few people who accurately predicted and timed the GFC (he went totally to cash before it set in) and has also accurately forecast events since then, has suggested we could see the ASX go to 1000 points and that the bottom will not occur until around 2016.



I don't listen to ABC radio so I don't know who you are talking about, would you mind telling me this persons name so I can follow up on his or her comments? It never hurts to hear another persons point of view, cheers.


----------



## Julia (30 November 2011)

Bill M said:


> I don't listen to ABC radio so I don't know who you are talking about, would you mind telling me this persons name so I can follow up on his or her comments? It never hurts to hear another persons point of view, cheers.




Here you go, Bill:
http://blogs.abc.net.au/queensland/...he-gfc.html?site=widebay&program=612_evenings

I'd not heard him before either but was quite impressed.  Also found it worth following up on his mention of Robert Prechter:   http://www.robertprechter.com/.

Another person Steve Austin has on his Evenings program regularly is Chris Leithner.
Again, always interesting and scathing about the events which have inevitably led up to the present global financial mess.


----------



## young-gun (30 November 2011)

Bill M said:


> Hey young-gun there are reasons for everything. I subscribe to many investment newsletters and broker reports. Roughly about 70% of these reports suggest the markets are going down and that Europe's and USA's debt problems will signal long term pain for eveybody. The other 30% are quite the opposite, some citing that this is the time to be buying Aussie stocks. P/E's and dividends have never been so good and that they are sustainable, they say.
> 
> For me as a lifetime investor (NOT TRADER) have been through a few booms and busts, this one is no different. I am of the firm belief that buying good companies that pay good dividends when everyone else is heading for the exit doors (or margin calls) is a good idea. I have bought quite a lot of double digit dividend paying companies lately and all I care about is how hard my cash will work for me. Right now I have a portfolio that pays me 7% dividends (mostly franked), why on earth would I sell that to get 6% in a bank account and then pay TAX? To me it would be a backward step and on any market dips like last week I tend to buy more stock and go long. I have have no interest in short term fluctuations it's the rest of my life and the income I need that matters. I hope that clarifys why some people are long. I might add if the market does crash to 3100 on the all ords (like the 70% suggest) then I will be buying like there is no tomorrow, to me it will be the second best chance in a lifetime, cheers.




my boss is of the same opinion. he has seen the booms and the busts. he bought in dirt cheap and is watching dividends roll in. but the fact is this is not your ordinary bust. this is going to be the biggest collapse of a bubble the world has ever seen. a bust that will see companies here in australia go under along with your capital and dividends.

if it plays out how i believe, your dividend payments will most likely become non existent as companies round up every dollar just to stay afloat. now it may be extreme, but the fact is its a very real possibilty, and i think to not have a 'plan B' in place for such an event is insane.(not to say u dont have one bill). the fact is yourself, like most other investors, must have a breaking point? u cant tell me that xjo hits 2000 and your still rosey?

this bust IS different. it's the mother of all bubbles rolled into one. every time the economy has tried to deflate governments stimulate, reserve banks lower interest rates and hey presto we bounce back reasonably quickly, because for some reason they honestly believe its possible to grow all the time, non stop, decade in decade out. in doing this they have never truly allowed the economy to do what it has so so desperately needed. we are currently staring down the barrel of 75+ years of economic and market manipulation, coupled with greed and a SH!TLOAD of debt, but it appears enough is enough, theres no coming back now. we'll probably just get printed into hyper-inflation.


----------



## explod (30 November 2011)

Young gun, that says it all.  

agree, we are in for a financial winter never witnessed before.


----------



## Ves (30 November 2011)

So, for you two extremist bears, what are you going to do if you get this one wrong? Surely, there's an opportunity cost for that side of the ledger too. 

And what if you are correct - and hyperinflation occurs, what is your plan? Wouldn't your cash be worthless?


----------



## sptrawler (30 November 2011)

young-gun said:


> my boss is of the same opinion. he has seen the booms and the busts. he bought in dirt cheap and is watching dividends roll in. but the fact is this is not your ordinary bust. this is going to be the biggest collapse of a bubble the world has ever seen. a bust that will see companies here in australia go under along with your capital and dividends.
> 
> if it plays out how i believe, your dividend payments will most likely become non existent as companies round up every dollar just to stay afloat. now it may be extreme, but the fact is its a very real possibilty, and i think to not have a 'plan B' in place for such an event is insane.(not to say u dont have one bill). the fact is yourself, like most other investors, must have a breaking point? u cant tell me that xjo hits 2000 and your still rosey?
> 
> this bust IS different. it's the mother of all bubbles rolled into one. every time the economy has tried to deflate governments stimulate, reserve banks lower interest rates and hey presto we bounce back reasonably quickly, because for some reason they honestly believe its possible to grow all the time, non stop, decade in decade out. in doing this they have never truly allowed the economy to do what it has so so desperately needed. we are currently staring down the barrel of 75+ years of economic and market manipulation, coupled with greed and a SH!TLOAD of debt, but it appears enough is enough, theres no coming back now. we'll probably just get printed into hyper-inflation.




So what do you suggest, leave it as cash? If you have hyper inflation as you say, your money devalues hyper quickly aswell.


----------



## explod (30 November 2011)

Ves said:


> So, for you two extremist bears, what are you going to do if you get this one wrong? Surely, there's an opportunity cost for that side of the ledger too.
> 
> And what if you are correct - and hyperinflation occurs, what is your plan? Wouldn't your cash be worthless?




Well I do not think it is extremist to observe that we have too many mouths to feed, overall resources are diminishing and most productivity increases (and there is little of that) requires less manual labour.

How can anyone really plan well for what is starting to happen.  I am as worried as anyone else.  Sure I have the vegie patch and other strategies in place but if we get to a certain point, as we are seeing, with the growing number of countries having huge riots and mobs out of control then I will be stomped on like everyone else.

Is it extremist to merely point out what is going on?


----------



## Ves (30 November 2011)

explod said:


> Is it extremist to merely point out what is going on?



 Of course not, that's probably hyperbole on my behalf. However, talking about chart levels of 1000-2000 on the major indices is extremist in my book.

History is cyclical, capitalism will not last forever. However, society as we know it is more likely to end with a whimper rather than a major bang. That is not so say that the financial system cannot collapse with a massive thud, but it will take more than just that alone. Ages and the empires within them have long-winded transition periods.


----------



## explod (30 November 2011)

Ves said:


> Of course not, that's probably hyperbole on my behalf. However, talking about chart levels of 1000-2000 on the major indices is extremist in my book.
> 
> History is cyclical, capitalism will not last forever. However, society as we know it is more likely to end with a whimper rather than a major bang. That is not so say that the financial system cannot collapse with a massive thud, but it will take more than just that alone. Ages and the empires within them have long-winded transition periods.




Agree up to a point, but in a lot of those days the world moved at the speed of a horse/bullock drawn cart, though in the Great depression we had the phone and morse code.

Today billions of dollars can be moved in a millisecond and companies and enterprises are movind in or out of profit nearly as fast.

On the TV news tonight they say that American Airlines filed for bankruptcy, but they add for them it will still be business as usual, why? 

because they have merely defaulted on thier debts, the PIGGS will, as with the US, if it has not in effect done so already.

Most observers are saying the Euro is gone and that China too is in trouble.  Sure once there was the Roman Empire which took a thousand years to collapse.

Today it is most of the planet and the deterioration only goes back about 50 years.  The outlook is so bleak in my eyes that I do not know anymore how to encompass it all into words.

Young-gun said it all pretty well.


----------



## Ves (30 November 2011)

A fundamental change in society (or at least one that I am thinking of) needs to be caused by a change in morality. On the surface it looks like this is changing, but I would argue that it has evolved slowly from the late 18th Century onwards. The pace in which the world moves (in financial and technological terms) has indeed sped up, but these are all based on the principle of "individuality" and "progress." Regression has sped up, I agree, but it will take more than a financial slump to kick out morality systems that are now centuries old. The gigantic collapse (if it even happens) will only prompt the need for change; not put it in place.


----------



## robz7777 (30 November 2011)

explod said:


> Agree up to a point, but in a lot of those days the world moved at the speed of a horse/bullock drawn cart, though in the Great depression we had the phone and morse code.
> 
> Today billions of dollars can be moved in a millisecond and companies and enterprises are movind in or out of profit nearly as fast.
> 
> Most observers are saying the Euro is gone and that China too is in trouble.  Sure once there was the Roman Empire which took a thousand years to collapse.




Roman Empire 27 BC - 1453 AD
British Empire 1497 - 1914/1965
US Dominance - 1945 - Now?
China - Now? or Ever?

The rise and fall of empires is certainly speeding. The recurring theme seems to be leaders spreading themselves too thin and sticking their fingers in too many pies. 
If and when the Chinese become the dominant power on the planet they may be wise to keep to themselves!!


----------



## young-gun (30 November 2011)

Ves said:


> So, for you two extremist bears, what are you going to do if you get this one wrong? Surely, there's an opportunity cost for that side of the ledger too.
> 
> And what if you are correct - and hyperinflation occurs, what is your plan? Wouldn't your cash be worthless?



I don't have a plan because I'm not sure what to do.. But I would say Buy gold. I guarantee u if the fed even has one more round of qe the price will take off. But I also think that if economies are allowed to deflate then gold and silver will come down.

I also believe that of all nations Australia will come out the best( not that that will be great) fingers crossed they see the errors of the US and don't print? Are we even allowed to?

All I know is I sold up all my stocks at 4800, but being young it wasn't as if it was 100k.

In conclusion, I have no frigin idea how to prepare for such events that may unfold, and that worries me.

Or maybe everything will be fine.

Ps if I am wrong then so be it, I would rather walk away not having made any money than having lost my small amount of cash. My view would probably change if I was heading into retirement


----------



## young-gun (30 November 2011)

explod said:


> Well I do not think it is extremist to observe that we have too many mouths to feed, overall resources are diminishing and most productivity increases (and there is little of that) requires less manual labour.
> 
> How can anyone really plan well for what is starting to happen.  I am as worried as anyone else.  Sure I have the vegie patch and other strategies in place but if we get to a certain point, as we are seeing, with the growing number of countries having huge riots and mobs out of control then I will be stomped on like everyone else.
> 
> Is it extremist to merely point out what is going on?




Haha explod this may sound ridiculous but would u believe I have even googled how to survive a depression.. Number 1 rule seems to be - get a gun


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## Julia (30 November 2011)

explod said:


> Agree up to a point, but in a lot of those days the world moved at the speed of a horse/bullock drawn cart, though in the Great depression we had the phone and morse code.
> 
> Today billions of dollars can be moved in a millisecond and companies and enterprises are movind in or out of profit nearly as fast.
> 
> ...



+1.  Agree with your comments explod, and, young-gun, that was a precise summary.
I agree with all you said.


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## howmanyru (30 November 2011)

There is already a slump, it may get worse. Most of us know how we all got into this mess, it's plastered all over the internet for all to see. Central banks, wastefull, incompetent governments, greedy human nature, blah, blah. In the past we had slumps, then got back on track, printed more money, expansion, consumption, etc. Is this time different? Heck yeah, not only economically, but people are waking up, changing their idea of what it means to be happy, healthy and so on. This shift in consciousness is huge and may be the main reason we may go down a different path in the future, perhaps a better balance and more sustainable future ahead ? One can only hope.


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## sptrawler (30 November 2011)

young-gun said:


> I don't have a plan because I'm not sure what to do.. But I would say Buy gold. I guarantee u if the fed even has one more round of qe the price will take off. But I also think that if economies are allowed to deflate then gold and silver will come down.
> 
> I also believe that of all nations Australia will come out the best( not that that will be great) fingers crossed they see the errors of the US and don't print? Are we even allowed to?
> 
> ...




Well I think this is your best post.
Nobody has any idea, just use your common sense, there are some things that people can't do without.
There are companies that have outlets here but their main income is from Europe or the U.S and the Australian arm is secondry. These will be hit hard.
There are some companies that make things people can't do without, even if they wanted to.
My view fits with yours and I'm heading into retirement.LOL


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## basilio (1 December 2011)

I think that if/when the merde hits the fan keeping things simple and accessible will be the best chance of staying on top of the heap.

Having a simple house you own. Reducing costs by growing food and sharing  resources.
I think that trying to keep complex, expensive lifestyles going  and depending on financial advisors and institutions  for the upkeep may be problematical.


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## Bill M (1 December 2011)

young-gun said:


> now it may be extreme, but the fact is its a very real possibilty, and i think to not have a 'plan B' in place for such an event is insane.(not to say u dont have one bill). the fact is yourself, like most other investors, must have a breaking point? u cant tell me that xjo hits 2000 and your still rosey?




If the XJO hits 0 and I don't get any dividends then all my other investments will still support me. I have a rental unit in a prime position in Sydney from which I drag a decent rent from. I also own a house which I live in now and have a yard from which I grow veggies from. Ripping up the lawn won't take long if I need to go there. 

I do not have any loans on any of my investments, I own everything outright and my wife still works part time, we will not starve that's for sure and we don't need to pay rent. So my plan B worst case scenario is probably better that 90% of other Australians. I do not think the XJO will hit 0, I do not think the world will end, I do not think interest rates will hit 0 and the world will go on as always has.


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## Bill M (1 December 2011)

There are a lot people calling a depression of a magnitude like we have never seen before. But very few offer any ideas on what to do with your money.

Lets look at Mr and Mrs average Australian. Both are 60 y/o, no bills, kids gone and own a 3br home in the suburbs outright. Both want to retire and live a bit of a life before they get too old. They have 500K in super between them. Their plan is draw down super until 65 then get a government pension in conjunction with a super pension after that.

Where is this couple going to invest this 500K for the next 5 years to make ends meet? Before anyone just says gold, they still need to pay cash for all their living expenses. What should they invest in during this slump?


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## Aussiejeff (1 December 2011)

"Awww, don't be a Chump & think there'll be a $lump,
The Banker$ think there's room for a Mighty Xma$ [size=+2]BOOM!![/size]"

LOL

All Ords 5,000 by Xmas? 

Cheap money for all!!!

Wheeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeee....


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## communique (1 December 2011)

Bill M said:


> There are a lot people calling a depression of a magnitude like we have never seen before. But very few offer any ideas on what to do with your money.
> 
> Lets look at Mr and Mrs average Australian. Both are 60 y/o, no bills, kids gone and own a 3br home in the suburbs outright. Both want to retire and live a bit of a life before they get too old. They have 500K in super between them. Their plan is draw down super until 65 then get a government pension in conjunction with a super pension after that.
> 
> Where is this couple going to invest this 500K for the next 5 years to make ends meet? Before anyone just says gold, they still need to pay cash for all their living expenses. What should they invest in during this slump?




I think “slump” is understated.  We are in unchartered waters.  Some say the outcome will be anarchy, some say the printing presses will keep applying bandaids, some say that new currencies will replace existing.  All the while it seems many are making a decent return on just trading at the moment (if you have the stomach for it) I would be protecting my capital at all costs.  No one knows how Australian banks could be hit by failures in Europe because of the domino effect. I am told the derivatives market is huge and if the US goes down so do we.  I am told that Credit Unions do not have the same exposure to risky investments that banks do, so maybe they are safer. I would say hard assets are always better in these circumstances.  Finally, people will always need to eat, so I understand that investments in soft commodities are a wise choice.   It is ironic that everything appears to be coming to a head in 2012.  Maybe all the hype about the end of the Mayan calendar is true!


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## disarray (1 December 2011)

Bill M said:


> Lets look at Mr and Mrs average Australian. Both are 60 y/o, no bills, kids gone and *own a 3br home in the suburbs outright*. Both want to retire and live a bit of a life before they get too old. *They have 500K in super between them*. Their plan is *draw down super until 65 then get a government pension* in conjunction with a super pension after that.




are you for real? retire at 60? spend on lifestyle for 5 years then go for a pension handout? i don't really want to beat the whole "selfish baby boomer" dead horse, but gtfo with that attitude.


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## Bill M (1 December 2011)

disarray said:


> are you for real? retire at 60? spend on lifestyle for 5 years then go for a pension handout? i don't really want to beat the whole "selfish baby boomer" dead horse, but gtfo with that attitude.




They are only getting what they are entitled to nothing more nothing less. This is a common strategy Financial Advisors suggest for older couples. Maybe take up your argument with the government and the Financial Planners Association, your comment doesn't answer my question.


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## Smurf1976 (1 December 2011)

A tad off topic but something I've noticed about complex _technical_ systems is that it all falls apart _very_ quickly when the right sequence of events occurs. 

Cascade failure is what we call it - one thing happens which puts more pressure on everything else. Then something else gives out, putting even more pressure on the rest. Then another one goes, quickly followed by _everything_ else as it all buckles under the sudden strain placed upon it. That's how it goes with engineering (particularly the electricity grid) and I see no reason why the same principle wouldn't apply in a much broader sense to the whole of society.

We are watching the Euro disintigrate before our eyes right now. Decades in the making and yet it all comes unstuck rather quickly. It was much the same with the demise of the USSR, fall of the Berlin Wall and other such historical events. Once one thing gives, the rest comes down pretty quickly. No matter how strong the engineering, political or societal structure may seem, it all falls apart alarmingly fast once things get going.

Closer to home we are seeing the virtual disintegration of public hospitals here in Tasmania. Disintegration to the point that I wouldn't count on even emergency patients actually being treated before much longer simply because there will be no wards, nurses, doctors etc still there to treat them (ambulance ramping is already quite common and the cuts will only make things worse...). Politics and the disgrace of it all aside, it's another example of just how quickly things fall apart in a supposedly wealthy society.

Now consider a scenario where some organisation of real importance can't get credit or otherwise can't continue normal operations. Credible examples are things like national, state or local governments, utlities (public or privately owned), important companies (eg coles, woolworths, the oil companies, airlines, communications companies etc). 

What happens if you wake up in a week's time and hear that someone like Caltex, Telstra or Qantas (randomly chosen "household name" companies for example only) is effectively out of business becuase they can't access credit or other forms of finance that they need to continue normal operations? And what happens if governments can't or won't bail them out because they also can't afford to? Then what? Life starts to fall apart pretty fast once you lose fuel, communications or transport services in a big way. Even if it's just your local bus company, it's still going to have a pretty big impact on life for many people.

The inherent nature of major crises seems to be that all seems well on the surface until suddenly it isn't. The way things are going, I wouldn't rule out a scenario where something major suddenly just happens due to finances. Things like airlines being physically grounded because they (or an important supplier) has financial issues etc. How you'd prepare for that I really don't know, but I would think it is at least a possibilty to occur given the overall circumstances at the moment.


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## disarray (1 December 2011)

i agree with what you say smurf. it wouldn't be so bad if regulation and compliance wasn't so completely onerous, because a collapse of the sort you mention would be fertile ground for a bunch of competition to quickly spring up. unfortunately to start any business or perform any service you have to jump through dozens of regulatory hoops and reach deep into your wallet for the privilege.


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## Smurf1976 (1 December 2011)

If we do end up in an outright depression then it's going to affect everyone in some way. Even if you have $1 billion, it's not going to be much use if you can't exchange it for goods and services.

Examples...

You own a jet ski and can afford to keep it and fuel it. But do you wish to advertise your wealth by using or transporting it in public view whilst millions are in economic misery? Anyone who has money under such circumstances would be wise to keep very, very quiet about it.

And then there's things like big events, music festivals for example. Things like Soundwave or any other large festival depend on scale to be viable. You have dozens of bands and tonnes of equipment to bring from overseas and then shuffle between 5 Australian cities. The whole concept just doesn't work wihout scale. Even if you have money and can afford to go, there will be no event to go to simply because not enough other people could afford to go so as to make it viable. Your money won't buy at any price something that it can very easily buy fairly cheaply today.

And even simple things such as (given it's now December) Chirstmas light displays on private residences. Even if someone can afford the cost, nobody's likely to be advertising their relative wealth by spending on something clearly non-essential and highly visible. You won't be packing the kids in the car and cruising the streets at night looking at fairy lights whilst waiting for Santa no matter how much money you have to spare.

And so on. I could list probably thousands of examples but you get my point. You may well have money and you may well end up eating but that would be pretty much it. Many of the nice things, the non-essentials, would disappear regardless of your personal ability to afford them. And if you can't (or won't due to wanting to keep wealth hidden) actually exchange your money for goods and services then I'd argue that it's basically worthless anyway.

Unless you are mega rich and can afford your own planes, golf course, concert or whatever else you want then you're not likely to be able to buy your way out of the effects of a depression simply becuase you happen to have a few $ million sitting somewhere. At best, the money will reduce the pain but it won't remove it entirely.


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## young-gun (1 December 2011)

sptrawler said:


> Well I think this is your best post.
> Nobody has any idea, just use your common sense, there are some things that people can't do without.
> There are companies that have outlets here but their main income is from Europe or the U.S and the Australian arm is secondry. These will be hit hard.
> There are some companies that make things people can't do without, even if they wanted to.
> My view fits with yours and I'm heading into retirement.LOL




first of all, i'd like to think i've had at least one other good post of my 100+...

secondly, even if i was to seek out such companies, i cant imagine their growth is exactly gonna be gang busters.

im gonna batten down the hatches, save as much as i can, and hope that i dont end up wiring buildings for a loaf of bread and a can of spaghetti.

perhaps buying stocks in maggi(2 minute noodles) is the answer?

ive mentioned before we're starting up a business due to open mid december...great timing.... lets hope someone has some disposable income in the coming years


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## sptrawler (1 December 2011)

Bill M said:


> There are a lot people calling a depression of a magnitude like we have never seen before. But very few offer any ideas on what to do with your money.
> 
> Lets look at Mr and Mrs average Australian. Both are 60 y/o, no bills, kids gone and own a 3br home in the suburbs outright. Both want to retire and live a bit of a life before they get too old. They have 500K in super between them. Their plan is draw down super until 65 then get a government pension in conjunction with a super pension after that.
> 
> Where is this couple going to invest this 500K for the next 5 years to make ends meet? Before anyone just says gold, they still need to pay cash for all their living expenses. What should they invest in during this slump?




This is only my take on this and I'm not qualified in any way. This is not advice, just my opinion.
The couple start their own super fund through a low cost online provider. Most will set it up for $0 but just check around and ask questions, eg ongoing cost.
As they are over 50 they can put $250,00 in each. At the moment they can get 5.7% term deposit and draw 3% allocated pension tax free earnings and pensions.Wait for the opportunity to buy bank shares when they crash.
They could just put the money in a joint account, $250,000 each @ 5.7% approx $13,000 each, which with the low income tax offset should mean that's tax free also(with no super costs). Then buy bank shares when they tank.
The only benefit I can see with the super is, if and when you buy shares and if you have a capital gain, it is tax free.
Anyway the main criterea is not to lose the principal too quickly. But $500,000 isn't a lot of money in this climate.
The other thing to check is, if the money is put in super, is it possible to claim job search, as you would obviously be looking for work as you travel around Aus.


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## Bill M (1 December 2011)

Excellent post sptrawler, sounds like a good plan to me. It's all about when the buying should be done isn't it? cheers.....


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## Julia (1 December 2011)

sptrawler said:


> The only benefit I can see with the super is, if and when you buy shares and if you have a capital gain, it is tax free.



Assuming the SF has been moved into pension phase.  If it's still in accumulation phase it is not tax free.


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## sptrawler (1 December 2011)

Julia said:


> Assuming the SF has been moved into pension phase.  If it's still in accumulation phase it is not tax free.




Good point Julia, I did say drawing a 3% pension.


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## Julia (1 December 2011)

sptrawler said:


> Good point Julia, I did say drawing a 3% pension.




So you did, sp.  Sorry.  I should read more thoroughly.


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## sptrawler (1 December 2011)

Bill M said:


> Excellent post sptrawler, sounds like a good plan to me. It's all about when the buying should be done isn't it? cheers.....




Bill empty your inbox!!!!!!


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## Bill M (2 December 2011)

sptrawler said:


> Bill empty your inbox!!!!!!




Sorry about that, all done now, cheers.


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## explod (6 December 2011)

Is there going to be a *slump* ???

http://www.jsmineset.com/2011/12/05/is-the-world-spinning-out-of-control/


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## young-gun (6 December 2011)

explod said:


> Is there going to be a *slump* ???
> 
> http://www.jsmineset.com/2011/12/05/is-the-world-spinning-out-of-control/




europe - as good as gone
china - hard landing, or crash landing?(seems to have fallen in the shadows of europe)
US - more debt than any other nation in the world, quite possibly more than European union combined, who knows anymore

perhaps the mayans were economists, and their calender was predicting the end of the financial world in 2012? 

if it can make it that far.


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## sptrawler (9 December 2011)

Interesting today, ANZ saying it won't necassarily follow the reserve bank, with interest rate movements.
This is the problem with one dimensional monetary management. The reserve bank wants to control inflation, and all it has at its control is interest rates.
This is the sledge hammer to break a wallnut problem.
The banks have to be the buffer between the reserve bank and the market realities.
If the government was serious about sorting the underlying problems in the economy, they would make adjustments to the tax system.
But that doesn't look good on the 6 o'clock news.


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## Aussiejeff (15 December 2011)

Mini slump in commodities markets overnight. Energy & precious metals all down around 5% or so.

Have a nice day!


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