Well alright then, lets just rename the thread... how to speculate and win in property in any market!... somehow that same logic does not apply to the share market.
ATO obsession... very interesting! I do have trouble connecting that with the concept I was trying to illustrate. Ain't that just the way though, get hooked up on a definition and piss up the wall about it. Should I still be on about your abilities with a calculator? I know % are confusing.... I hope you worked out the 23% right.
Hotdog... infamous tech company, if you don't remember.
Yes LAND, it has been mentioned a number of times that I was talking about the building so either you willfully ignore or you have comprehension trouble. Guess what you are only partially right in that, its not so much the land... think about it! Think real hard Forest.
Look guys, as far as the property cohort are concerned this conversation is what it needs to be so that they can be right forever. We can't talk fundamentals becuase that is not price and price is all that counts (classic bubble mentality by the way!). When the price is flat suddenly its about speculating and the success (or not?) of a local single dwelling development. If that qualifies as a development, I was always a little more circumspect with that one, single dwelling is a speccy in my book you don't even get your junior developer badge until you are creating at least one new title (there is a clue).
Jeeze I wonder what sort of response you'd get if you where screaming 50% correction... in real terms of course... but then all that counts is the number of dollars right? Not what they can buy right? Hey here is an idea, you should have gone to Zimbabwe, man did they know how to do it right! In nominal terms that is.
RBA sets monetary policy which defines Governments.
Yep go on... do it. Why don't you explain the 80's interest rate spike and how it had nothing to do with the US bond market and US monetary policy. I repeat... in reality the RBA has limited scope of influence when things are stable. With in that context the RBA does have an effect on politics but if it where seen to be undue you would hear our politicians scream the roof down. Most of the time this is the case but even then you will find that they take their guidance from the short bond rates. When stresses build and the bond market reacts, central banks have no real choice but to follow, well actually they have one choice but it is of limited effect.
Interestingly the Fed looks about ready to use that choice. QE or direct monetization of their bond market, by the way, just in case you didn't know that is how they create money over there... it is loaned into existence and the system. So the Fed will blip up some new money from nothing, go buy some UST's with it and the US people end up owing the Fed the money plus interest, interest on something that was created from nothing! Even Zimbabwe didn't have that handicap (US Fed is a private institution by the way, just a side note!) Yippeee I hear property speculators say! This will support the bond price and keep yields and rates low! Now while that is true it pays to consider this... a large amount of UST's are owned overseas and when direct monetization of the bond market occurs bond holders step to the logical conclusion, inflation which will destroy the pitiful yield on offer so they sell driving rates back against the Feds efforts to keep them lower. Typically when they sell a % the money goes back off shore sending the USD lower which also impacts on price inflation and the value of all other OS held bonds. Now if most of these holders held the bonds for purely economic reasons (which they don't) trouble would show up in the form of higher rates quite soon, either that or insane levels of money printing by the Fed to support the market but that would be pointless becuase they are already experiencing the "pushing on a string" effect, you can only borrow so much even at 0%. One saving grace is that many of these bonds are held by foreign governments that are more interested in maintaining the value of their currency relative to the USD. Basically keeping it low so that the US can buy goods easily, it also has the happy side effect of keeping rates in check so that they can lend as well as spend on all those lovely things you export to them. Anywhoooo.... at some point that games ends, at some point direct monetization breaks the deal because the US consumer becomes of less value to the Asians and the investment at risk out weighs their value. We are entering that period of time... the end result will be high rates or high inflation both of which will impact the cost of money. Since we rely on OS money it will drive our rates higher, quite probably not as much as the AUD should be stronger but by enough to stress the debt laden.
UNTIL one of you can produce the hardship you are so KEEN to quantify I will proffer my backing with Profesor Robots. Afterall .... he has got it right.
It is a false assumption to suggest that hardship is required, over extension in good times has sent many people to the wall. We are extended in terms of debt NOW, it actually only requires us to reach a tipping point. It could be as simple as some necessity going up in cost basic things, electricity, food, medical etc. When there is no stretch left in credit that is all it takes, a small movement at the margin. It would show up subtly at first but in time could compound if underlying conditions don't change. I suspect we might be there ATM, in the build up. I don't know, I am watching.
Anyway Trainsmash, I know you don't do subtlety, only price. Price of everything and the value of nothing and all that.
5) Secondary wave of GFC - possible but unlikey due to this Guvmint printing money to prop the industry up.
WTF you don't recognize that alone as a major danger?!
3) One of the big 4 banks falling over - unlikely but possible. (Govt backed I believe)
Yeah look the banks can still go broke. The deposits are guaranteed by gov to stave off bank runs. This does not mean that they can't still blow up, if they did it would put pressure on rates. It is likely that they would nationalize a failing bank but its not a given. Regardless either event would be rate negative and would be paid for by the population as a whole via tax or newly minted money (inflation) which would further compound any debt stress in the market. Given the exposure I would think we are going to end up nationalizing at least one of the big four before this is done, my bet is the Commonwealth FWIW.
Watching 4 Corners on Monday? I wonder what they will focus on!
4) Toxic debt and non recourse and ratchet loans kicking in - We don't have ANY of these.
Yep no liars loans ever happened here did they? Fact is we don't know just how toxic these loans may or may not be. Non recourse... LOL, its called personal bankruptcy in this country. Not a first choice but there is no recourse. Interestingly enough in the US they made credit card debt recourse... it even survives bankruptcy... now that is a powerful lobby group! Most Americans don't even know that the change happened. Anyway, talk to a few boat builders about it... you'd be surprised how many have gone bust in their name, their wives name and even in their kids name.. it was all the rage late 70's into the 80's. Recourse means little if you actually hit the wall which is why most jingle mail happens. People don't tend to walk away while there is social stigma attached. The problem in the US is that it is so common it has just about lost its stigma.
Can anyone tell me what happend in the stockmarket over the same period of time? HUH ... anybody? Lets go say ....... I dunno ....... overall nationally seasonally adjusted 3 years ago as to what happened and how much did it lose in this period?
Now why is it you insist on cherry picking the real estate numbers and opportunities but want to treat the entire and very diverse stock market as a whole?
Anyway... on it goes!