Australian Politics General...

[sptrawler]

Just wondering if that's "middle of nowhere" or mining towns or is it in places with a more diverse economy?

Well, there really is no diverse economy in W.A, it is all attached at the hip to mining.
The area I was talking about was the NW of W.A, it was only 5 years ago Labor were bleating about the outrageous cost of housing and rents in the area.
Now they are bleating about the money the Government spent to alleviate the problem, I guess that is the up side to being in opposition.
IMO the only areas in W.A that are showing any upside at the moment, are those in catchment areas for high achievement public schools.
Well here is an example, google Mandurah it is situated about the same distance from Perth, as Geelong is from Melbourne, or Woollongong from Sydney.
A property here can be purchased from as low as $170k, prices there are the same as they were, post GFC.
So this idea the Government needs to jump in, IMO is nonsense, all that is required is the Banks need to ensure they have enough collateral to ensure the investors can cover any losses.
I guess they need to be prudent, as Iuutzu would say.

 

[sptrawler]

Screwing the young new money is part of the plan too.

Yep, everything is part of the plan, it isn't anything to do with peoples choices. Just part of the plan.lol
Let's not blame those who chose to take the risk, to make a killing, let's just blame the plan.
We may well be saying the same about Sydney and Melbourne, in a few years, then it will be yes it was all about ripping us investors off.lol

 

[luutzu]

Yep, everything is part of the plan, it isn't anything to do with peoples choices. Just part of the plan.lol
Let's not blame those who chose to take the risk, to make a killing, let's just blame the plan.
We may well be saying the same about Sydney and Melbourne, in a few years, then it will be yes it was all about ripping us investors off.lol

You know all these policies are made by people right? It's not some invisible hand of "the market" dictating policies based on rational analysis of demand/supply blah blah.

That's not to say that investors aren't also to blame. But not all investor have the knowledge or experience to know when they're being played... and most don't believe their own gov't would be playing them instead of looking after their interests.

Take interest rate.

If interest is low, what will most likely happen to the stock market, the property market? What will investors most likely do when rate is low?

These are known facts. They have worked before and will work again. That's why they're implemented.

Say you run a country... how do you keep the plebs in line? Make sure they keep their heads down, get to work and don't question or annoy you?

Can't beat them up, we're not some dictatorship. We're law and order.

So you get them into debt, most of them. If they don't work, can't pay their debt; if they ask or complaint too much, might get fired; if they take time off to protest, might get fired... How will they pay off all that debt and mortgages if they're fired? So better behave.

How to get them into a mortgage? Put fire under the property market for a few years... see if they wouldn't run out and just buy in case they can't afford it anymore later.

Then with $1M or so mortgage... that'll take a lifetime to pay off. Pretty hard to invisibly push people into "voluntary" good behaviour that long.

In case you think I'm making this up, check out an old Senate hearing where God Greenspan was giddy about how he managed to make the economy going so well (for the rich)...

His secret: worker insecurity.

Create policies where workers aren't paid much, have high debt, and can easily be fired. See if they're brave enough to not work real hard at low wages.


----

That's not to say that such policy intention are productive or moral. They're not that effective if other costs are taken into account.

Costs like marriage breakup; stress and related illnesses; broken homes and highly stressed population.

That's fuel for revolution.

 

[Value Collector]

Have been telling you.

Anyway, would you deposit your cash, even for a day, for zero real interest? No? Then why is it fair that depositors ought to?

It's a safe place for their money? It's supposed to be safe. And depositors aren't exactly hiring a safety deposit box are they? Their cash is being use the moment it comes into the bank, use to make money for the bank.

I have cash in a business bank account right now earning 0.01%, and another $18k sitting in a term deposit paying 2%, and that's about all those two holdings diserve to earn, offcourse my funds that I want to earn investment returns on I put them into investments.

 

[luutzu]

I have cash in a business bank account right now earning 0.01%, and another $18k sitting in a term deposit paying 2%, and that's about all those two holdings diserve to earn, offcourse my funds that I want to earn investment returns on I put them into investments.

But you're young and somewhat clever.

How would an elderly pensioner fare if they cannot afford to put any of their money at risk. How would a person living from paycheck to paycheck and putting aside a few grand for that rainy day?

Tough titties? Their money deserve to be use for free?

 

[SirRumpole]

I have cash in a business bank account right now earning 0.01%, and another $18k sitting in a term deposit paying 2%, and that's about all those two holdings diserve to earn, offcourse my funds that I want to earn investment returns on I put them into investments.

You are being ripped off.

1% in a deposit account and 2.6 in a term.

Less fees of course.

 

[sptrawler]

You know all these policies are made by people right? It's not some invisible hand of "the market" dictating policies based on rational analysis of demand/supply blah blah.

That's not to say that investors aren't also to blame. But not all investor have the knowledge or experience to know when they're being played... and most don't believe their own gov't would be playing them instead of looking after their interests.

Take interest rate.

If interest is low, what will most likely happen to the stock market, the property market? What will investors most likely do when rate is low?

These are known facts. They have worked before and will work again. That's why they're implemented.

Say you run a country... how do you keep the plebs in line? Make sure they keep their heads down, get to work and don't question or annoy you?

Can't beat them up, we're not some dictatorship. We're law and order.

So you get them into debt, most of them. If they don't work, can't pay their debt; if they ask or complaint too much, might get fired; if they take time off to protest, might get fired... How will they pay off all that debt and mortgages if they're fired? So better behave.

How to get them into a mortgage? Put fire under the property market for a few years... see if they wouldn't run out and just buy in case they can't afford it anymore later.

Then with $1M or so mortgage... that'll take a lifetime to pay off. Pretty hard to invisibly push people into "voluntary" good behaviour that long.

In case you think I'm making this up, check out an old Senate hearing where God Greenspan was giddy about how he managed to make the economy going so well (for the rich)...

His secret: worker insecurity.

Create policies where workers aren't paid much, have high debt, and can easily be fired. See if they're brave enough to not work real hard at low wages.


----

That's not to say that such policy intention are productive or moral. They're not that effective if other costs are taken into account.

Costs like marriage breakup; stress and related illnesses; broken homes and highly stressed population.

That's fuel for revolution.

So what is your problem?
Wanting to save the greedy investor, or wanting to put the first home buyer into an overheated market?
Market forces will bring about a correction, at the moment the Government is supporting the boom, it has a two fold effect creates jobs and supplies housing.
The supply of houses and the demand for houses, will match eventually, but usually there is an overrun.
This results in a glut, as as happened in W.A, then you have a resultant drop in prices, or do you think there are endless investors to buy properties they can't rent.

 

[Value Collector]

But 5% (correction) is the CBA's actual current dividend yield ie what the investors are currently getting on their capital and they are not complaining as far as I can see.

If you have CBA at 5% yield and you thought 8% was a bad return you are in for a shock.

You are confusing return on the share holders capital ie (return on equity) with dividend yield, the dividend yield is not the important number, it will fluctuate with share price and what directors decide to pay out.

What is important is how much the assets owned by share holders inside the business is earning.

Spend a few minutes reading up on return on equity.

Share holders own the "net worth" of the company, this is called equity, and they want this equity to generate a return for them, when you buy and sell shares you are taking ownership or selling a piece of this equity, that's why shares are sometimes called "equities"

CBA is currently earning about 16% on it's equity, and the shares are selling for about double the book value of its equity, as an investor return on equity is one of the most important things to understand, it's basically telling you how much the assets owned by the business are generating for their shareholders.

 

[Value Collector]

You are being ripped off.

1% in a deposit account and 2.6 in a term.

Less fees of course.

You won't find a business account with the features I need paying 1%, anyway the money doesn't stay their long, and the term deposit is part of a bank guarantee on a business premises lease so I can't really be flexible with it,

But either way as I said, with these funds I don't see them as investments

 

[sptrawler]

You are being ripped off.

1% in a deposit account and 2.6 in a term.

Less fees of course.

Why, even I can see his business account would attract 30% tax. why would he have it in a high yielding account, when it attracts high tax and a lot of accounting fees.

 

[SirRumpole]

What is important is how much the assets owned by share holders inside the business is earning.

Yes, but if I buy shares in a company and I'm interested in dividend income, what I look for is dividend divided by what I pay for the shares so I can compare that with what I would get from a bank for that amount of money.

And sure yield varies with share price, but the only figure that interests me is the yield at the time I buy the shares.

So you seem to be saying that for CBA the banks assets (in reality the depositors money) is earning 16% , but they are only paying 5% on their share price, then shareholders are being ripped off as well ?

 

[luutzu]

So what is your problem?
Wanting to save the greedy investor, or wanting to put the first home buyer into an overheated market?
Market forces will bring about a correction, at the moment the Government is supporting the boom, it has a two fold effect creates jobs and supplies housing.
The supply of houses and the demand for houses, will match eventually, but usually there is an overrun.
This results in a glut, as as happened in W.A, then you have a resultant drop in prices, or do you think there are endless investors to buy properties they can't rent.

It's not always the greedy investors that get burnt.

First home buyers are also among them.

Those lucky enough to have decent job and a partner with a job, planning on starting a family soon... in an overheated market most that can somewhat afford it will rush in "in case" it goes beyond their reach.

The inexperienced, or the over-confident or bored investor might still jump into an overheated market... but most would have already sold out and bagged that profit.

So when the market crash, guess who have the cash lying around to scoop up, rinse and repeat?

---------

There are other ways to encourage jobs in the building industry. It does not need to be new houses.

You make property affordable to most Australians to buy; they buy it and with savings and some spare cash, will start to rennovate, fix up their castle, make it all nice and pretty.

That create just as many jobs, and jobs for small contractors rather than the big master builder who's screwing over the little sub-contractors...

When a person own their home and rennovate it, they tend to not go cheap and build dodgy stuff. They, like my Dad, will over-engineer and overdo water-proofing and painting like it's supposed to be.

Most new houses from master builders are pieces of crap. Be lucky if any would last 20 years.

That and when property are high, most would rent... the owner won't be fixing or rennovating it; so it become a slump.

See how there's at least two ways to get the same economic results. But one is chosen over another. And it tend to happen that the chosen way benefits the rich.

There are classes in society. Serves us well to recognise it even if we ourselves don't think it's right.

 

[sptrawler]

Yes, but if I buy shares in a company and I'm interested in dividend income, what I look for is dividend divided by what I pay for the shares so I can compare that with what I would get from a bank for that amount of money.

So you seem to be saying that for CBA the banks assets (in reality the depositors money) is earning 16% , but they are only paying 5% on their share price, then shareholders are being ripped off as well ?

You seem to think, the Banks should be a not for profit organisation?

 

[SirRumpole]

You seem to think, the Banks should be a not for profit organisation?

There is little competition isn't there ?

We used to have mutual societies where the depositors were also shareholders. But they obviously disappeared when greed took hold.

 

[sptrawler]

It's not always the greedy investors that get burnt.

First home buyers are also among them.

Those lucky enough to have decent job and a partner with a job, planning on starting a family soon... in an overheated market most that can somewhat afford it will rush in "in case" it goes beyond their reach.

The inexperienced, or the over-confident or bored investor might still jump into an overheated market... but most would have already sold out and bagged that profit.

So when the market crash, guess who have the cash lying around to scoop up, rinse and repeat?

---------

There are other ways to encourage jobs in the building industry. It does not need to be new houses.

You make property affordable to most Australians to buy; they buy it and with savings and some spare cash, will start to rennovate, fix up their castle, make it all nice and pretty.

That create just as many jobs, and jobs for small contractors rather than the big master builder who's screwing over the little sub-contractors...

When a person own their home and rennovate it, they tend to not go cheap and build dodgy stuff. They, like my Dad, will over-engineer and overdo water-proofing and painting like it's supposed to be.

Most new houses from master builders are pieces of crap. Be lucky if any would last 20 years.

That and when property are high, most would rent... the owner won't be fixing or rennovating it; so it become a slump.

See how there's at least two ways to get the same economic results. But one is chosen over another. And it tend to happen that the chosen way benefits the rich.

There are classes in society. Serves us well to recognise it even if we ourselves don't think it's right.

They don't have to buy in Sydney, or Melbourne, there are opportunities in regional centres, but those who want a quick profit focus on Sydney and Melbourne.
Don't expect me to be sympathetic to their cause.lol

 

[sptrawler]

There is little competition isn't there ?

We used to have mutual societies where the depositors were also shareholders. But they obviously disappeared when greed took hold.

Funnily enough, I'm a member of P & N Bank, previously I was a member of Energy Credit, which was absorbed, so I really aren't talking from a vested interest.

 

[luutzu]

They don't have to buy in Sydney, or Melbourne, there are opportunities in regional centres, but those who want a quick profit focus on Sydney and Melbourne.
Don't expect me to be sympathetic to their cause.lol

I know enough property "investor" to not be sympathetic if they lose. Not that it's a nice thing, but some people "own" three houses and their noses always point to the sky when they talk to me. Asking how my adventure in stock is going.

I'm talking about young home owners.

 

[luutzu]

You seem to think, the Banks should be a not for profit organisation?

By all mean make profit. Just don't screw over (mainly poor) people and pensioners out of their interest and calling it fair.

 

[Value Collector]

Yes, but if I buy shares in a company and I'm interested in dividend income, what I look for is dividend divided by what I pay for the shares so I can compare that with what I would get from a bank for that amount of money.

So you seem to be saying that for CBA the banks assets (in reality the depositors money) is earning 16% , but they are only paying 5% on their share price, then shareholders are being ripped off as well ?

It's really short sighted to invest based in dividends alone, you should invest based on what the company is going to make in profit and what they plan to do with it.

No, the total profits the bank makes, is 16% of the share holders equity ie the net amount of assets owned by share holders.

For example, you start a pizza shop

You put in $50K of your own money, and borrow $50k from the bank, so you have $100k in total.

You rent a shop front, hired a manager, you spend the $100k to buy a pizza oven, fit out the shop nicely, signage etc.

After 12 months the shop made $55k gross profit, you pay $5k to the bank in interest, you $15k in tax, leaving you with $35k profit.

Your $35k after tax profit is a 70% return based on your equity of $50k you put in at the start.

So you as a share holder are earning a 70% return on equity, which is really good.

Cba is currently earning 16% on the funds its share holders have put in.

 

[SirRumpole]

Cba is currently earning 16% on the funds its share holders have put in.

Yes fine, but when the shares were originally allocated they would have cost say $1 each. The share price is now say $80. So that 16% is only relevant to the people who bought the shares at issue time correct ? And they are probably all dead or have sold their shares.

So your 16% means nothing to people who buy shares now . Am I right ?