The state of the economy at the street level

[willy1111]

https://thewest.com.au/business/markets/flying-blind-the-dark-side-of-our-funny-money-ng-b881034875z

The instability, caused by all the 'money printing', is finally coming home to roost. IMO
Next problem, how do we get rid of all this paper debt, while still keeping confidence in the fiat system.
I wonder if we will have a 1 for 10 consolidation of money, oh what a mess.

It's different to the past, and there is an undercurrent of concern for the level of world debt...but on the other hand I start to think why can't there be ever increasing debt.

I mean the governments make the rules, they can just keep creating debt, increasing debt limits...use debt to pay the interest. Kind of like a line of credit you never pay off, just keep increasing the limit. Who do they owe the debt to? There is a theory that if this happens it devalues their currency...but if the US is the world denominated currency then possibly they can do what ever they want???

Maybe it is a paradigm shift and we just need to accept it rather than be worried about it?

The man on the street can't do it, coz eventually the bank says no more and then its game over for him...but for government's?

 

[sptrawler]

It's different to the past, and there is an undercurrent of concern for the level of world debt...but on the other hand I start to think why can't there be ever increasing debt.

I mean the governments make the rules, they can just keep creating debt, increasing debt limits...use debt to pay the interest. Kind of like a line of credit you never pay off, just keep increasing the limit. Who do they owe the debt to? There is a theory that if this happens it devalues their currency...but if the US is the world denominated currency then possibly they can do what ever they want???

Maybe it is a paradigm shift and we just need to accept it rather than be worried about it?

The man on the street can't do it, coz eventually the bank says no more and then its game over for him...but for government's?

The problem with that, at some time you will be on $1m/week and a loaf of bread will cost $2,735.99.
That will cause problems, a house will cost, $520,000,000, younger people have enough problems adding up already.

 

[luutzu]

The problem with that, at some time you will be on $1m/week and a loaf of bread will cost $2,735.99.
That will cause problems, a house will cost, $520,000,000, younger people have enough problems adding up already.

Like our Asian neighbours to the north

 

[sptrawler]

Like our Asian neighbours to the north

The only difference is, they don't have any trouble adding up, they are as sharp as tacks when it comes to money.
They have to be, it isn't thrown at them, like it is here.

 

[willy1111]

The problem with that, at some time you will be on $1m/week and a loaf of bread will cost $2,735.99.
That will cause problems, a house will cost, $520,000,000, younger people have enough problems adding up already.

Maybe in 50, 100 or 1000 years it might be like that

Someone in 1950 probably thought it would be extraordinary to earn $100k a year in 2018. Now it is very common.

A lifting of the debt limit would need to be progressive and considered to keep inflation at a reasonable rate, ie less than 3% p.a.

It seems to me, what is occuring and I can't see why it can't happen ad infinitum.

 

[willy1111]

Like our Asian neighbours to the north

Are you talking about Japan?...I wouldn't like to have be an index investor in the Nikkei since 1990

Maybe you can expand on your comment a little more?

 

[sptrawler]

Maybe in 50, 100 or 1000 years it might be like that

Someone in 1950 probably thought it would be extraordinary to earn $100k a year in 2018. Now it is very common.

I'm 63 and I find it extraordinary.
When I started work, an electrician was on $2.5k a year 1970, so do the sums on that.
My best mate is a council garbo, and he will crack $100k this year. lol

 

[luutzu]

Are you talking about Japan?...I wouldn't like to have be an index investor in the Nikkei since 1990

Maybe you can expand on your comment a little more?

Was referring to the hyper inflation Homer was saying. So economically developing countries like VN where the daily bread is in the tens of thousands... or as the local put it, "ten dong" [just drop the 000].

But yea, heard that Japan haven't recovered from its 1990s property boom/crash.

It's going to take us a generation or two to recover from our big one that's coming.

I mean, around Fairfield/Cabrammatta [Western Sydney]... a run down, mouldy fungus infested fibro next to an industrial zone right in the flood plain is asking for $1000+ a m2. Or about $800K to $1m.

 

[sptrawler]

Was referring to the hyper inflation Homer was saying. So economically developing countries like VN where the daily bread is in the tens of thousands... or as the local put it, "ten dong" [just drop the 000].

Your spot on Luu, I remember a few years back I took a taxi from the Ben Thanh markets to the Port, the taxi driver quoted $4U.S.
When we got there I gave him a $10 U.S note, he gave me 120,000 dong change.
I said mate give me the $10 US back, I'll give you the fare in dong, I can't use it anywhere else.
He said I don't want that $hit.

 

[luutzu]

Your spot on Luu, I remember a few years back I took a taxi from the Ben Thanh markets to the Port, the taxi driver quoted $4U.S.
When we got there I gave him a $10 U.S note, he gave me 120,000 dong change.
I said mate give me the $10 US back, I'll give you the fare in dong, I can't use it anywhere else.
He said I don't want that $hit.

The Dong's probably not worth the money it's printed on. Which is not too bad for the owner of the People's mint printing contractor, who just happen to be the son of the top people's representative.

They don't allow foreign exchange at jewellers now. It'll have to be through a licensed bank where you give them less fake money for their worthless crap.

 

[Smurf1976]

Someone in 1950 probably thought it would be extraordinary to earn $100k a year in 2018. Now it is very common.

We're at the point now where being a millionaire isn't particularly notable or unusual. Get on any random domestic airline flight and most likely there's a few millionaires on board and quite likely they're sitting in economy not business class.

Go back far enough and simply being a millionaire would of itself have made you famous unless you were careful to hide the fact.

I've seen the account records for major things built a century or so ago, railways or bridges and so on, and you find costs like 90K for the whole project. These days it would be $100 million+ for the same thing.

 

[Wysiwyg]

I mean, around Fairfield/Cabrammatta [Western Sydney]... a run down, mouldy fungus infested fibro next to an industrial zone right in the flood plain is asking for $1000+ a m2. Or about $800K to $1m.

As a self mutilated buyer at the property boom top, I wish I could save the buyers of those extreme Cabramatta valuations. Sadly they will bury themselves in debt for something that will be worth less in the coming years.

 

[sptrawler]

We're at the point now where being a millionaire isn't particularly notable or unusual. Get on any random domestic airline flight and most likely there's a few millionaires on board and quite likely they're sitting in economy not business class.

Go back far enough and simply being a millionaire would of itself have made you famous unless you were careful to hide the fact.

I've seen the account records for major things built a century or so ago, railways or bridges and so on, and you find costs like 90K for the whole project. These days it would be $100 million+ for the same thing.

I was on a cruise earlier this year to the U.K, more than half of the 3,500 passengers were Platinum or Elite, which meant they received perks for being regular cruisers on that line.

I guess they will have to raise the membership requirement.
My Son and his wife are taking the three grandkids and flying to Sydney to do a cruise around N.Z.
Life can't be all bad.lol

 

[Smurf1976]

Never judge people by appearance.

Just happened to notice someone in a shop this morning. Wearing old clothes and first impression would lead you to assume unemployed or low income.

They paid with a Diamond credit card.

Never judge on appearance.

 

[Wysiwyg]

Never judge people by appearance.

Just happened to notice someone in a shop this morning. Wearing old clothes and first impression would lead you to assume unemployed or low income.

They paid with a Diamond credit card.

Never judge on appearance.

*20.24% p.a. purchase interest rate

Shouldn't be long before his appearance is matched by his financial situation ....

 

[luutzu]

Never judge people by appearance.

Just happened to notice someone in a shop this morning. Wearing old clothes and first impression would lead you to assume unemployed or low income.

They paid with a Diamond credit card.

Never judge on appearance.

Went to pick up a few tap mixer for my brother yesterday. Wearing short, sandle, hair like I just woke up [my usual style]... the guy there gave me a tradie price without me asking for it

 

[luutzu]

As a self mutilated buyer at the property boom top, I wish I could save the buyers of those extreme Cabramatta valuations. Sadly they will bury themselves in debt for something that will be worth less in the coming years.

yea, unfortunately it doesn't look like it's going to work out well for quite some years at recent prices.

Not sure if it's still listed, but there's this other land on the low side of the rail track, backing onto a stagnant creek, in a literal dead end street a few hundred metres away from a sewerage waste treatment centre... big land you could sub divide into 3 blocks [subject to council approval ]... asking for about $1.4M or higher.

Though a few agent to blocks along the same creek are a bit more sensible and asks you to call them instead.

 

[Darc Knight]

Negative gearing changes 'could tip Australia into recession', warns John Symond
https://mobile.abc.net.au/news/2018...negative-gearing-warning/10602484?pfmredir=sm

 

[PZ99]

I think that claim is a houso-scare. High income earners who divest from property will reinvest somewhere else in the economy. Last time I checked, shares were quite cheap

It's quite ironic really - it's housing debt that got us in the sheet in the first place, yet Mr Symond wants my taxes to sponsor even more debt for housing?

 

[luutzu]

Negative gearing changes 'could tip Australia into recession', warns John Symond
https://mobile.abc.net.au/news/2018...negative-gearing-warning/10602484?pfmredir=sm

These property spruikers are just trying to scare us into giving them ( through their clients) government subsidies with inflated property prices.

While reversing NG would push the property market off a cliff, causing a recession... got to remember that NG was a major cause of the property exuberance. Bringing investors, those fearing of missing out onto that cliff.

Now that the dreamtime is about to end with a bang through credit tightening, overstretched investors and young homeowners barely making ends meet, seeing their investment either already under water or about to sink... blaming reversal of NG for the recession is just a bit much.

With foreign investors either pulling out or being constrained by their gov't to shift capital offshore; with never before seen individual/private debt level... Australia's going into a recession no matter what.

To keep the current generous NG subsidy is just these spruikers ways of keeping themselves rich for the next boom. I mean, it'd be pretty bad for them if they pick up during the current downturn and the gov't didn't step in with NG subsidies to reflate the market again.