i
the interest rate's and oil prices was un called for and the jump was to harsh-(lets not lie about that)
we all know this is a good country and we are tough-but yet we seem to follow the silly people-
i mean this credit crunch is related to people who cant pay back or am i wrong here?
what happen to the good old days when u needed a decent % for a house loan- i knew their was going to be problems when u give people 100-110 % $$$?
There's certainly some interesting questions raised here in this topic, and this one is an interesting post - I thought I'd participate. Apart from someones explanation above re cash rate target, I should also point out there is a historical reason for the asset growth thus far that has fuelled inflation of credit growth faster than 'normal'. In this, the consumption shifts from the expense via operating cash, to asset credit. Although you correctly pointed out above that the credit crunch was triggered by the housing crisis, its the tip of the iceberg. So much of the credit market is not 'just' houses, negative credit resulting from large deflation of assets (triggered by subprime) that has experienced too much boom. The result of ignoring inflation and fuelling excessive consumption, and now the opposite, the destruction of asset valuation due to the result of too much inflation and bad monetory policy, and the crushing result of attempting to kick start the economy by money supply dilution through more consumption (MORE CONSUMPTION!!!! It's ludicrous)). Undoing this 'trend' is going to be extremely difficult - and will probably never really be the same again - we'll probably end up somewhere in between the 2 extremes when equilibrium arrives.
The question about how it affects Australia, it does heavily. When money dilution occurs (in USD) many non-divisable commodities are traded against real money value, as well as sentiment. When both are being fuelled by tigtening supplies and increasing demand, this creates a huge forward bubble in futures taking into effect the dying dollar - this inflates our economy too far. It is in my opinion, (I'm probably a minority I dont know) that the RBA is indeed doing an excellent job in forward predicting inflation and now this asset deflation period.
I don't want to say too much more in case I get booted out of this forum - but instead of blaming the media, I'd like to ask you this question Nick - do you feel you are being made to pay for the war in Iraq, the mortgage crisis of Freddie & Fannie's irresponsibilities, and now deal with the shrinking (or even negative) credit due to irresponsible asset bubble creation ? Needless to say, I am not a big fan of Bernanke and together with the Bush administration, I really do believe this is the root of the problems. I also believe this steals from the already hungry and starving ppl of the lesser developed nations by further fuelling their inflation (food exports rush). It's a dangerous game they play, and it costs ppl their lives. I don't blame the media, I blame Helicopter Ben, and Bush.
ps. I'd also like to know when the market will show signs of recovery. All elliot wave stuff is great for my reading cause I dont understand it, and can't do it (but I'm very open to it)