Inflation is like perpetual motion. The inflation rises so interest rates are increased and that increases the cost of lining so wages rise to cover the cost of living. That causes inflation so that causes interest rate rises. Then you need the bulls to increase the national asset value to offset the inflation and the cost of interest.
Stock Market Crash - End of the Bull!
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I reckon the Australian market will crash when the number of members in Aussie Stock Forums doubles within 6 months. When we have everyone interested in it. Like in some countries when they say servants and taxi drivers are talking on mobile phones to their brokers all day. ( I don't want to discriminate any professions here so I won't give a local example)
Cheers.
Ok please let me know just before it doubles!
lol
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Inflations have a long history and they don't end well for most. Universally popular at first until the downsides become apparent. And universally hated at the end.
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Interesting to see how many Aussie Councils have loaned money, indirectly, to the US Sub-Prime mortgage market. The Federal Government may be forced to ask many councils "are you in difficulty".
Thoughts are that Chinese Banks have lent massive sums to borrowers to purchase property in China and much of this is far worse than the Sub-Prime mortgage lending in the US.
Thoughts are that Chinese Banks have lent massive sums to borrowers to purchase property in China and much of this is far worse than the Sub-Prime mortgage lending in the US.
Well, raising interest rates in the short term may do this. But the long term effect on money supply is what makes interest rates such a powerful tool against inflation. By making it more expensive to take out loans means less loans and debt - which is the major inflators of the money supply. A decrease in the money supply means any money in the system is inherently worth more - hence this exerts a deflationary pressure.
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News of the conduit (ABCPC's) crisis that has not yet been admitted by many institutions continues to concern many in the markets. Major Banks are under huge pressure to step in with their balance sheets to bail the conduits out.
Many Banks throughout the World have built up conduits and conduits are backed by American subprime mortgages. These off balance sheet vehicles used to finance the Banks purchase of assets through the sale of short-term commercial bonds, are typically backed by residential and commercial mortgages.
Some large Banks have admitted exposure: HBOS (Grampian Fund): A$44 billion; Fortis (Scaldis Fund): A$32 billion; Lloyds TSB(Cancara Fund): A$29 billion; HSBC (Solitaire Fund): A$27 billion; ABN Amro (Amstel Fund): A$24 billion; and ING (Simba Fund): A$19 billion.
Many Banks throughout the World have built up conduits and conduits are backed by American subprime mortgages. These off balance sheet vehicles used to finance the Banks purchase of assets through the sale of short-term commercial bonds, are typically backed by residential and commercial mortgages.
Some large Banks have admitted exposure: HBOS (Grampian Fund): A$44 billion; Fortis (Scaldis Fund): A$32 billion; Lloyds TSB(Cancara Fund): A$29 billion; HSBC (Solitaire Fund): A$27 billion; ABN Amro (Amstel Fund): A$24 billion; and ING (Simba Fund): A$19 billion.
And the FTSE and the Dow and the Nikkei and the Hang Seng and the All Ords have all reversed sharply to be up and still climbing towards all time highs.The big miners are revelling in market confidence.
Is it the end of the bull.Most probably not.The indicators of the sub prime fiasco have failed to keep the market down.The Fed and Central banks have intervened to keep investors hopes going up.
I don't know how long it will take any gloom to return to the market but the futures market and Vix certainly do not indicate this.
Looks like I had better get back in and enjoy the prosperity.
The same result could be gained without raising interest rates. In my younger days you could not get credit without having a substantial deposit for the purchase, eg. 33% for a new car or 40% for a second hand one. 10% to 25% for a home. No such thing as "no deposit, no interest payments for a year" Some sort of that type of rule would cut spending and encourage savings.
In effect, that's exactly what raising interest rates do! Encourage saving, and cut spending. Having a minimum deposit level is again is very similar to raising interest rates - because people have to delay consumption and save. A difference of what you propose is that it will basically -force- people to save. This can be both a good and not so good thing.
Except that raising the interest rates affects everyone with a loan where as
higher deposits does not increase the cost for anyone. It only delays purchases for those who couldn't afford to buy without saving first.
wayneL
VIVA LA LIBERTAD, CARAJO!
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Futures and VIX do not predict or indicate anything, they simply "reflect" the current market. They respond, and do not lead.
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Just wondering how high can the present "dead cat" bounce up to so that I can sell and make some profit? Or have we changed our minds about the dead cat.
numbercruncher
Beware of Dropbears
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Looks like the Fed has/is opened the flood gates, guess well all make more money, just itll be worth less and less as it gets more diluted itll feel like more, itll look like more but itll be less bang for yer buck!
Funny old world isnt it ......
itll feel like more, itll look like more but itll be less bang for yer buck!Funny old world isnt it ......
theasxgorilla
Problem solved... next bubble.
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You are probably going to be right numbercruncher, but inflation is a lagging effect. And in some markets deflationary effects are simply too powerful to stand a chance against inflation. I guarentee you can still buy more computer for the same dollars this time next year.
If you paid for your software computers are no way near cheap... The hardware is cheaper but the software is ridiculous depending what you need it for... Cos of Architecture I need Revit 10 which is about $7000 and then I need Window Vista another $500 maybe, then I need Photoshop, Illustrator, Microsoft Office, Adobe Professional, AutoCAD and a decent movie making program thats another $6,000 ... Oh and then I need 3d Max which is another 4,000... And maybe Rhino which I'm sure is probably 1000 bucks... Google Sketchup rules at 200 bucks... Computers are not so cheap if you go legit... And of course Pro Trader which is something I plan on getting is 900 bucks plus 55 dollars a month
theasxgorilla
Problem solved... next bubble.
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Insider,
Thats why you pick and choose what you need to get through the degree to your satisfaction so you get the job you want at completion. If you want to be a CAD or 3d Studio Max operator, by all means get and learn all those software products. If you want to be an architect I dare say your money would be better spent on a good camera, big books with lots of photos and diagrams and some overseas holidays.
And I guarentee the camera will cost less in 12 months time too.
Thats why you pick and choose what you need to get through the degree to your satisfaction so you get the job you want at completion. If you want to be a CAD or 3d Studio Max operator, by all means get and learn all those software products. If you want to be an architect I dare say your money would be better spent on a good camera, big books with lots of photos and diagrams and some overseas holidays.
And I guarentee the camera will cost less in 12 months time too.
Wait who said I paid...
lol Yes technology gets cheaper as it is filtered down its just the way it goes... did you know that most things were made and first used by the army? then it just filtered down and sold commercially. Then more and more people start making the same thing and then those items become super seeded and the factory is made to close down but because there were so many employees the factory stays open and keeps making those same super seeded products until its too old... Just like Sony and Sanyo...Yes I a holiday would be nicer
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Banks turned south in New York and London as Barclays Bank is the latest to come in the firing line over mortgage based loans. One Barclays fund, alone, is said to be in deficit of hundreds of million of pounds and rumours abound that the ABN bid is now less certain to proceed.
Announcements from Australian Banks, Governments, and Councils may spread the problems a good deal wider.
So what happens when the fed cuts the rate in a day or two ?
Will that solve the problem .. it will certainly bring back short?? term euphoria like when the DOW spiked 300 points at open at the last cut.
Will that be a band aid solution or will it fix the problem going forward.
Is this a guessing game or can one trade the market with confidence.
All very confusing for a newbie
Rob
Will that solve the problem .. it will certainly bring back short?? term euphoria like when the DOW spiked 300 points at open at the last cut.
Will that be a band aid solution or will it fix the problem going forward.
Is this a guessing game or can one trade the market with confidence.
All very confusing for a newbie
Rob
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What do people think ??? Are we in for another week of stocks falling hard or a day !? Do I sell now or sell in 2 days when I take a bigger lose!
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