Australian Property Crash????

It kept Howard in office, and if you're a politician that's all that counts.

 

What did, the Australian property crash in the title?

 

huh?

 

You didn't quote anyone in your reply, what do you mean?

 

Actually it is the private debt that is more of a risk to the economy (and it dwarfs the government debt). Our gov. debt is not that high compared to other countries but our household debt is near the highest.

PS: I is not unusual to be right about financial predictions but be out with the timing, ie bubbles can keep going a long time before they burst.

 

Shhh.I know that and you know that.

Next you'll suggest that the goverment should borrow hand over fist to fund infrastructure, given that 15 year bonds are below 3%...

 

House wife economics dictates we should never borrow. Never ever.

 

Interest rates won't go up until the economy strengthens. Once economy strengthens people will have more cash and rising incomes. More cash and rising incomes = higher ability to spend on purchasing property. It's all good ...

 

Well do agree with what I said or not? Looks like you are having it both ways.

PS: with fiat currencies and powerful central banks it is not actually necessary for governments to borrow to finance infrastructure. They can simply monetize the debt (and this is being talked about if there is another slump and other measures like QE, ultra low or negative interest rates no longer work)..

 

We can have a good economy - and some markets that aren't doing so well.
It's all good until it's not

 

Fair comment. The real problem for me was that it was an unproductive deficit. I see a lot of comments from economists saying how the mining boom was squandered, and I tend to agree.

If a central bank monetises debt, is that done after the infrastructure has been built? Or do you mean they just print money to pay for the infrastructure?

 

In what form is the 'debt' currently?

 

This one from Morgan Stanley (quoted by Alan Kohler)
For every $9 of new NET foreign debt the country has added, our Nominal GDP has increased by just $1. Given supposed lack of CAPEX recently... one can only guess its those productive mortgages powering the blow-out

NFD to Nom GDP by aushousingcrash posted 6th Jun, 2016 at 8:49 PM

 

What does "monetise the debt" mean?

 

I predicted a slump coming up, and we are about to enter into it IMO...it takes a while for storms to brew, and a few factors have to line up...they have been IMO.

If you read back, I predicted a slump in 2016....slow down and stall (of r/e) about now. Not saying I'll be 100% right, but within 12 months of that would be not a bad prediction.

In macro-ecomomics I agree - Aus is doing OK; folks still have jobs mostly...we are not in a depression, but recession is a real possibility soon.

But look at the bigger indicators to get the real picture - low interest rates and getting lower (means no inflation and no growth), spending power of the average wage earner has decreased even further, self funded retirees have less income, mining has slumped, manufacturing has slumped and is still slumping, our population is growing, but jobs aren't really increasing (part-time and casual are),our deficit is increasing but revenue isn't, our population is ageing but we cannot fund the welfare to pay for it, farmers struggling, retail not doing that well in growth terms...

The only thing holding it all up (for growth) has been the r/e industry of late - building has been going along nicely, and low interest rates have been allowing folks to buy, but the booms will have almost depleted the pool of folks who can continue to buy for a while - it will slow down, just as every cycle always does, Seech....

and then you are left with only Tourism and a few services/hospitality.

 

Creating new money to pay the debt. Eg the government will put the debt in the form of bonds and the central bank will buy the bonds with new money it has created. It adds to the money supply. It would only be considered in extreme circumstances when there is little risk of inflation.

 

Well said MTR-
Manage your debts ,keep high cashflows,add value where you can ,and re-buy with not just equity but cash

 

The same methodology can explain what's been going in the US bonds markets for the past five years,and most times it's misunderstood even by professionals..