Forum Replies Created
- CHIS wrote:So that millions of people don't start defaulting on the loans?
The main reason is so that banks can do business with each other. When the money dries up between banks, the economy stops deadYou can't make an omlet – if it takes the defaults of millions to keep the economy strong than so be it, there are way more millions that need a strong economy. Look at the US, weakening the economy caused millions of bankruptcies anyway…
Ok, so our banks can now borrow from the RBA for 1% less at a currency that is 20-30% less in global trade. Great.
Mister wrote:TheYoungInvestor wrote:So should the property investors in sydney wait for a couple of more months before the prices really drop? Or you can start buying now because it's the right time?I keep getting confused is it the right time to invest or wait?
Don't worry it's confusing for anyone right now .
I actually came back to soften this post but with Sydney though – definitely wouldn't if I were you.
I just think it has to go down and quite a bit yet as it is so dear . You could save a fortune just by waiting 12 mths.
CheersIt's confusing to KRudd also, check this out –
At 2.55 it was really bad, bad, bad, bad
http://www.news.com.au/business/story/0,27753,24469483-462,00.html
At 8.27 we aren't heading for recession, it's not a nightmare and Krudd isn't a commentator…. hmmm
http://www.news.com.au/business/story/0,27753,24472400-31037,00.html
Mister is right,
Property may not go down any more (though I specualte otherwise) but the chances of it going up by a substansial amount over the next 12 months are definately less likely.
superhoops wrote:Whilst Australia's economy is strong it certainly is not immune from world factors, therefore anyone predicting that Australia's interest rates would continue to rise whilst other countries interest rates remained stagnant or even fell has little insight into economic theory. Therefore any advice that they provide should really be taken with a grain of salt.I'm not trying to defend Scamp here but if the RBA wanted to keep Australia financially strong it would have left IRs, or even put them up a bit. We are doing exaclty what the US did in reponse to the subprime and how well did it work out for them? Bugger the theory, sometimes one needs to think outside the box for the best result.
The RBA has lowered rates in the midst of food,fuel and house price inflationary pressure, to an extent that is usually reserved for the second quater of a recession. Why? Just because it's what other countries did?
harb wrote:Life is good, there is nothing you can do about the situation in the financial world so why worry about nothing and give yourself an ulcer ?I won't get an ulcer about financial collapse – it's exactly what I've been waiting for, remember. The less money drives descision making in Australia, the better as far as I am concerned. I get ulcers when it looks like the market is recovering:)
So I guess for me, at the moment, life is doubley good.
Devo,
I understand some of your opposition to Scamp over-zealous doom and glooming but how can one derive FACT in a world where finacial gain is fueled largely by spin and specualation. The fact that there are no hard FACTS is very much part of the problem.
You know want I want, I want the tide to come back with quite a bit less money in it so we can all stop pretending that affluence matters and get back to being decent people. But like everyone else, any arguments that support it are still mostly specualation. In the same way that REAs boosting the market, die hard property optimists like harb and even balanced views like yours are still speculation,
True, we don't know how it is all going to play out but most would have to admit that what the financial world is up against now is worse than any of us have seen in our adult lifetimes.
CHIS wrote:Putin is turning Russia into a new super power. There sales of gas and oil have the economy cranking.He's doing well…
http://www.news.com.au/business/story/0,27753,24467228-31037,00.htmlAt the moment everything is up and down like a hard working whore. It is turmoil and confusion, like 1929…
http://www.news.com.au/business/story/0,27753,24466538-31037,00.html
You watch, tommorrow they'll both be up:)
C2 wrote:unmester,If you only concentrate on a portion of the post then it will be easy to come out with negative comments.
Reread the post and you might be able to get the gist of it. The point I made is that there have been people saying doom and gloom for the last 20 years. Property values have gone up and down but more ups than down. Interest rates have been a lot higher than people are facing today. The real estate investors of today will most likely be the success stories of tomorrow as long as they adjust their investing methods accordingly the same way I did and others when others were sprouting their doom and gloom.
That is a different point to your first post, written and presented in a totally different manner. I re-read it, they do not mean the same thing. Your first post was about the ups and downs, showing some times as bad and some as good, taking niether a bull or bear side. This post is much more positively in favour of investing and eludes to all times having the potential to be good.
Anyways, I was paraphrasing the whole thread, not just your comment. If I was paraphrasing you I would have quoted as such.
So basically, investors who have been in the game since 2002 or earlier will still be profitting. The rest are f$#ked…
F has a point. The governement is a slow, beurocratic beast (i should know) but it always catches up with those who defraud it.
IP Freely wrote:If interest rates are such a blunt instrument, which has been carefully used in small doses to slowly reduce demand in the economy how can the RB now justify a reduction of 100 basis points? (a real reduction of 16.67% ie from 7% to 6% – is this a gross over-reaction?)
Should they have continued to slow the economy over the past 12 months when the slowdown was foreseeable since Oct 07?
What will be the effect of a reduction in such a large magnitude? Will consumer credit once again become a concern? With the exclusion of the resources sector from the Balance of Payments, how big will the deficit be?
What has happened to the risk premium (as inflation is tipped to hit 5% this year)?
Will Krudd & the Goose use the 'big' drop in interest rates as ammunition for the next federal election?The only thing that makes sense is panic – but considerring Australia is "better placed to weather the financial storm than the rest of the Western World" I am not sure what the RBA is worried about?
It seems similar to what was going on in America before the sub prime broke into all it's glory – which is scary, because America has no end to it's financial problems.
I was hoping the Australian RBA would be smarter, force inflation right down and decrease asset values in line with wages whilst simaltaneously increasing the dollar. They haven't. They may even, dare I say, create another mini spending boom – which will be bad long term.
I hope Australian's can be smarter than their lines of credit…
Seems that way – but you have to wonder why the RBA gave such a big cut?
Ok – I may have to about face here. The RBA cut rates by a whole percent (and we aren't even officially in recession) so the banks should be able to allow some cuts through to the mortgage holders – possibly why the RBA did it. I never thought the RBA would cut by that amount, it usually only happens when the country is fully in recession.
Macnatt wrote:I disagree with Scamp about massive job losses in the mining industry. The mining boom is underpinned by the asian markets which have esacped the financial meltdowns of the US and Europe virtually unscathed. Australia is indeed a lucky country at the moment as its economy is not underpinned by financial markets like the US and Europe but by the resource sector largely coming from WA where my properties are. We will have a degree of insulation from a complete meltdown due to this simple fact but that is not to say that we will not feel any further retraction in the economy as clearly we will.You seem like a nice landlord and we need more of those. I must note, however, that the Chinese economy is based around producing stuff for America. US recession = Chinese downturn = less raw material purchased from Australia.
China will be the next dominant global power but not until the shakedown is complete.
Aren't REAs currently the most untrusted proffession in Australia, having beaten even Lawyers?
Treat them like you treat any other salesperson, politley but always aware of the fact that they need you more than you need them. If you don't buy, it's their loss, not yours. There is heaps of stuff to buy at the moment and heaps of REAs looking to make a sale. Everything they say is about making the best sale they can, so everything you say should be about making the best buy you can – that keeps the playing field fair.
harb wrote:The way I see it is more like a landlord who lost $1000 at the blackjack table and then puts up the rent to cover his loses. I suspect we'll see RBA drop 0.5% this month and the banks 0.3%So why would the banks lower rates if they have losses to cover?
I saw an analyst on the business channel predicting a 0.2 cut from the banks as a political measure in response to an RBA cut of 0.5. The analyst didn't think it would be a good move on the banks behalf, though.
Scamp wrote:Get out, and stay out of property until prices dropped 50%.Even I am not waiting on drops that high… still, Scamp, you have brightened my day.
harb wrote:Sounds wonderful in theory and I'm sure you could come up with formulas to prove your point , too bad life doesn't work this way and people sometimes make irrational decisions.
Like investing in overvalued property
http://www.news.com.au/business/money/story/0,25479,24452030-5013951,00.html
kum yin lau wrote:Hi Ummester, AUD came off the high of 95/96 cents to USD. How can that be bad? Parity [it came really close] was never sustainable at that point in time.We're now around 80 cents. It's a natural adjustment .
But heres the thing – when we were almost at parity the US economy was in decline (about 6 months into the subprime thing). Now, the US is even deeper in financial poop and our dollar is worth less compare to theirs. So what does that say about our dollar and the global markets confidence in Australia?
Yossarian wrote:Interest rates are on their way down because of legitimate concerns that the credit crunch is flowing through to the "real" economy". A downward cycle is far from an indicator that things are rosey.Indeed. When reserve puts rates up, economy is strong. When a reserve lowers rates, the economy is week.
I just can't see the banks lowerring rates from here till the crisis is over – they have to get their financial power from somewhere. They way I see it is like a landlord rising rents to keep up with rising costs – the banks have to do the same thing. A reserve cut assists the banks with their costs and tries to cancell out a rise for the lender but that all depends on how well the reserve can judge the bank's balance books.
Just give the REA a letter for the owner. If the REA asks why, say it is not related to anything that concerns your current rental agreement. The REA doesn't have to know anything else and would be breaking the law if they opened the letter. If the REA doesn't want to pass it on, ask for the owners postal details.
If the REA shoves you off, ring the water supplier for your sate and request the postal address for the account holder of the property you are renting. Say a bill was sent to you by mistake or something, if they need a reason…
I recon it is more prudent to ask them if they are interested in selling first, before putting an offer in. Otherwise you might seem too agressive and it gives you an oppurtunity to judge if the owner is really interested in selling or not be the response.
