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Bloody Nanny State

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Sir Osisofliver

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http://www.abc.net.au/news/stories/2009/05/07/2562989.htm

So lets get this right...

Because Mr Numbnuts who has no financial education decides to give complete control of their financial security to Dodgy brothers are us, and things go pear shaped and he loses the lot... because he is a fool with no risk management in place...everyone else has to get more bloody red tape.

Grrrr

Sir O
 
Sir, in my, admittedly uninformed, opinion I think regulation of margin loans is a bit overdue? There are a lot of cowboys out there in the financial advice marketplace & getting a license (or authorised rep., or whatever its called now) is ludicrously easy (I remember a recent post from Julia about a 20 year old in one of the banks dispensing financial advice who clearly had no idea).

And at the end of the day it will be of benefit to reputable practitioners (such as yourself), wont it?
 

I remember being phoned by a financial institution to flog me life insurance. When I advised the guy that I had it through my super fund, his response was that my super fund probably was not safe and I should switch to his financial institution.

Plenty of cowboys, plenty of cowboys
 

But one of the things they are talking about stopping altogether is so called "double debt" where you use the equity in your home and then use a margin lending facility to increase the size of your equity exposure (and having a large amount of borrowed funds in comparison to your own equity).

When things go pear shaped this is where these people lose everything.

But there is nothing wrong with the strategy of "double debt" if the proper risk management is in place. Investing in this way at the top of the market = dumb/stupid/bad/wrong...investing in this way at the bottom of the market with proper risk management in place = optimisation/positive gearing/massive compounding effects/bewdy mate.

At the end of the day it means more hoops that we have to jump through because ignorant people and their money are soon parted and these ignorant people whinge/bitch/ and don't take personal responsibility for their own ignorant actions.

This means that I get to spend less time with each client (because I have hoops to jump through). What this ultimately means is I will target my services to those clients with more money (because I need to deal with less clients) and smaller clients get to go elsewhere.

Cheers
Sir O
 

So should we stop homeloans?

considering the government needs to continuously be bailing out investors with FHBG and state government incentives?
 
From the ABC item:

So does this mean, e.g., that no one can access any equity in a freehold home to buy shares?

Surely they're not going to go that far??

Perhaps I misunderstood but I thought where the Stormers got into real strife was when the shares bought with equity loan from the family home were then used for margin loan. Can someone clarify?
 
I suspect that the legislation will mirror the provisions in the Consumer Credit Code that provide comprehensive disclosure and so on.

My belief is that people can ride to hell on their own bicycles. Provided they can speak English, and are sane adults, if they want to mortgage their family home and put it through the markets or the pokies - why is that the government's problem? You cannot protect people from all improvident business transactions.

That said, there needs to be transparency about what people are truly agreeing to. Certainly there were some examples of nobody understanding what they deal was, once it all fell in a heap - names omitted to protect the guilty.
 
Soft Dough said:
So should we stop homeloans?

considering the government needs to continuously be bailing out investors with FHBG and state government incentives?
Click to expand...

Huh?
 
If we took all of the safety labels off of products, we'd be doing future generations of the species a favour.
 
Soft Dough said:
Well if margin loans are causing people to lose money or take undue risks

and housing loans are doing the same thing.

why not regulate both?
Click to expand...

OK, got it tks.

Mr J said:
If we took all of the safety labels off of products, we'd be doing future generations of the species a favour.
Click to expand...
LOL. I've heard replacing air bags (in cars) with bayonets could be helpful too.
 
Soft Dough said:
On the mainland as well or Tassie only?
Click to expand...

It'd bring Tassie up to the national standard .

I believe when you protect people from their own stupidity, it will lower their intelligence and free them of responsibility.
 
Given that the market is a tool for transferring wealth from the "pondlife" to the sharks I'd like to see more regulation designed to protect ordinary people. It's not just dummies who get caught out - highly intelligent people who simply lack knowledge of business cycles, etc have lost a lot of cash too.

We also need protection from our own government. Governments cause the biggest problems by distorting business cycles(interest rate meddling), by not letting markets set the proper price of assets(housing subsidy), and by not properly regulating powerful market players.

We need a combination of a freely operating market that directs investment flows appropriately and is allowed to periodically clear out bad investment, along with sufficient regulation to protect ordinary people and prevent bad behaviour by corporations.

All IMHO - happy to have someone set me straight.
 
It will be interesting to see the details

because Margin loans can only be made against authorised unencumbered STOCK.

no home equity involved at all.

If people are taking a PERSONAL home equity loan, buying shares, then margining that, as in Storm

well it will be different

ATM, I have an ongoing home equity loan facility, which I use to fund various big costs, that I dont want to draw down on my investments.

however, it can be used for ANY purpose

so how would the bank even know.

the paperwork will be horrendous

or they could just put a simple clause in bold, that says

"if you take a risk and lose your money, such is life"
 
Calanen said:
why is that the government's problem?
Click to expand...

Because they vote, and if enough of them have a bitch and enough closed thinking extra voters tutt tutt and insist people need to be protected from themselves, they get listened to and we get swathed in more red tape and complication with little redress.

There are some very smart people out there that are convinced more regulation is the answer, having learned nothing from history. As ever, all it will do is place an impost on the rest of us and protect no one

Maybe I should join these guys ?

http://www.ldp.org.au/index.html

At least I seem somewhat philosophically aligned, I certainly feel no affiliation for Liberal/National or Labor
 
Mr J said:
I believe when you protect people from their own stupidity, it will lower their intelligence and free them of responsibility.
Click to expand...

There is a theory going around that states:

There is a finite amount of clue in the universe. As the population increases there is a progressively smaller amount available, leading to a complete lack of clue in more and more people.

m.
 
marklar said:
There is a theory going around that states:

There is a finite amount of clue in the universe. As the population increases there is a progressively smaller amount available, leading to a complete lack of clue in more and more people.

m.
Click to expand...
This is interesting. Maybe a topic for its own thread?
I think there's a similar proposition re compassion or 'worry capacity', i.e. that we all possess X amount and as the woes of the world increase, we become less and less able to empathise.
 
There is a finite amount of clue in the universe. As the population increases there is a progressively smaller amount available, leading to a complete lack of clue in more and more people.
Click to expand...

It's certainly believable.

I think there's a similar proposition re compassion or 'worry capacity', i.e. that we all possess X amount and as the woes of the world increase, we become less and less able to empathise.
Click to expand...

It's possible they're just false emotions. I believe we can genuinely care about those within our circle of influence, but it grows thin outside of that. Perhaps we care about those in the community only because we realise the community helps us survive. It's something we can't know until we're thrown into a desperate situation.
 

Ah, but what defines a community? In this modern era of easy travel, and of course the Internet - does the community extend only to your house, your family, street, suburb, state, country? Perhaps even Internet forums!

I don't believe there's anything wrong with apathy, and I rationalise that by the fact that if we all shed a single tear, and spared but one second in our day for every suffering in the world - we would not live one moment of our own lives, and we'd all die from dehydration!

So, to put it bluntly; I couldn't give a damn less about all the plight I see on TV :
 
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