Central banks - Stupid or Deliberate?

Discussion in 'Property Market Economics' started by jazzsidana, 11th Oct, 2019.

Join Australia's most dynamic and respected property investment community
  1. jazzsidana

    jazzsidana Well-Known Member

    Joined:
    27th Jan, 2018
    Posts:
    455
    Location:
    Melbourne

    Only other time rates were this low is during 1930 (global depression). Interesting time we living in!


    ratechart.png
     
    dragon likes this.
  2. Kangabanga

    Kangabanga Well-Known Member

    Joined:
    21st Jun, 2015
    Posts:
    1,241
    Location:
    Brisbane
    Well we were supposed to be in a global recession/depression type scenario after gfc but the central banks stepped in to reflate asset bubbles and keep things stable and growing. Thats probably why we havent seen any hyperinflation happen which is supposed to be a side effect of low rates and ’money printing’
     
    jazzsidana likes this.
  3. dragon

    dragon Well-Known Member

    Joined:
    24th Jun, 2017
    Posts:
    86
    Location:
    sydney
    So whats next? Where are we heading?
     
  4. standtall

    standtall Well-Known Member

    Joined:
    19th Oct, 2015
    Posts:
    975
    Location:
    Sydney, NSW
    Central bank has two options. Let the economy slide into slow death or cut rate in an attempt to stimulate it. Whether it works or not, it’s a no brainer choice.
     
  5. datto

    datto Well-Known Member

    Joined:
    23rd Jun, 2015
    Posts:
    3,082
    Location:
    Mt Druuiitt

    A Sydney housing boom :)
     
    Silverson and Propertunity like this.
  6. marmot

    marmot Well-Known Member

    Joined:
    23rd Jan, 2018
    Posts:
    945
    Location:
    N.S.W , W.A
    But they have been doing it since 2012 and its still not working.
    More rate cuts will fail for the same reasons all the other rate cuts failed.
    If you have a leaky boat you eventually have to fix the leaks , rather than just trying to bail out more and more water..
     
    albanga, shorty and jazzsidana like this.
  7. Kangabanga

    Kangabanga Well-Known Member

    Joined:
    21st Jun, 2015
    Posts:
    1,241
    Location:
    Brisbane
    as many economic analysts say --> into the unknown.

    But u can probably see where we are heading by looking at countries in europe and japan. Likely to enter a period of stagnation where wage growth is subpar / economy supported by regular infusion of central bank easing/ negative rates, etc.. And everytime the central bank starts tighten and raising rates or scaling back bond purchases(easing), economy takes a hit and they have to reverse policy again.

    But it has to end sometime or maybe not and central banks/govs keep kicking the can down the road without actually addressing issues like failing enterprises surviving on debt/ decreased productivity.... who knows?
     
    sqe and dragon like this.
  8. jazzsidana

    jazzsidana Well-Known Member

    Joined:
    27th Jan, 2018
    Posts:
    455
    Location:
    Melbourne
    Fed has created mother of all bubbles and Oz is not far behind.

    Buckle up I'll say - This one is going to be one wild ride!


    upload_2019-10-12_23-21-55.png
     
  9. dragon

    dragon Well-Known Member

    Joined:
    24th Jun, 2017
    Posts:
    86
    Location:
    sydney
    Lets enjoy another roller coaster ride. Its going to be fun. Lucky person will cash out..


    I think we won’t go like Japan or europe for long. Gov can start big infrastructure project to simulate the economy. This would make to quick recovery when things goes wrong. And here there are lot to do develop. I will say build few second tier cities. Start to plan & build New roads/ trail , towns , school for next 50 year’s need. Go beyond bluemountain and connect them.
     
    Angel, datto and paulF like this.
  10. paulF

    paulF Well-Known Member

    Joined:
    29th Jun, 2015
    Posts:
    826
    Location:
    Melbourne
    They simply lost control. At such lower rates, lowering any further is simply won't do much. The onus is on the government as per @dragon above.

    Australia is in a good condition compared to the rest of the world but i think the only real worry is the level of debt. Good read below from the ABS :

    6523.0 - Household Income and Wealth, Australia, 2015-16

    Either way, from a mortgage holder perspective, it's probably the best time in history to smash the mortgage at such low rates.
     
    gman65 and Coffee like this.
  11. Serveman

    Serveman Well-Known Member

    Joined:
    17th Apr, 2017
    Posts:
    204
    Location:
    Kings langley
    While the RBA is dropping rates to avoid a rising unemployment rate, I don't believe they will be aiming for a another market boom, more of a steady growth scenario. While I could be wrong, I believe if Sydney and Melbourne start booming again they will just use APRA to tighten lending again.
    Looking around at Sydney at the moment I believe that the reports that Sydney is rising is not entirely true. Looking at many suburbs in Western Sydney for example in the last 6 months houses in many areas have contracted by $30k and right now they maybe going sideways.
    All the noise is coming from the premium areas where there has been a lack of stock and some select suburbs have recorded increased sold prices. Some of the property strategists that work in these areas are really pushing this narrative. I honestly don't know how people can hold million dollar properties in their portfolio especially if unemployment rises or interests rates go up again, which they will.
    I think if you had some increased immigration from UK, Germany and Hong Kong then that could be more of a game changer.
    With present income levels of Australian's I don't believe Sydney or Melbourn makes any sense for investors unless they have a huge deposit or using a strategy that allows them to improve the asset.
     
    Brickbybrick likes this.
  12. albanga

    albanga Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    2,121
    Location:
    Melbourne
    The reserve bank is simply doing what they can given the Government is sitting on their bloody hands.

    They simply need to be investing in major infrastructure projects connecting our major cities. STOP TALKING ABOUT IT!!!

    We need fast rail connecting Melbourne to Sydney as a starting point with stops in major satellite cities.

    And we need proper internet, the NBN is arguably the worst project any Australian government has ever delivered. It’s already archaic.
     
    charttv, Angel, paulF and 3 others like this.
  13. jazzsidana

    jazzsidana Well-Known Member

    Joined:
    27th Jan, 2018
    Posts:
    455
    Location:
    Melbourne
    Government should have focused more on promoting entrepreneurship rather than just relying on property/mining. But they left it for very long. Hence, RBA now is left with .75% (3 more bullets to fire) before QE starts & negative rates..

    Anything that can help win the election becomes the key/only focus and property is right on top of that list.
     
  14. dragon

    dragon Well-Known Member

    Joined:
    24th Jun, 2017
    Posts:
    86
    Location:
    sydney
    Completely agree. But this will kick in once all goes bad. This can bring au back to normal very quickly. There are lot of options for us to recover. I think China also did same during 2008 by building new cities..
     
    albanga and Serveman like this.
  15. Kangabanga

    Kangabanga Well-Known Member

    Joined:
    21st Jun, 2015
    Posts:
    1,241
    Location:
    Brisbane
    Pretty sure there's billions just came in to Aus housing market from hongkong in recent months, could explain the uptick in premium syd/melb areas. I read a bloomberg article talking about undisclosed capital flight from China as well this year apparently.
     
    gman65 likes this.
  16. albanga

    albanga Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    2,121
    Location:
    Melbourne
    Absolutely! We should be building our own Silicon Valley right here in Australia yet our Government was so short sighted with the requirements of the internet that we have no chance.
     
    charttv and Brickbybrick like this.
  17. LibGS

    LibGS Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    889
    Location:
    Melbourne, Australia
    If the LNP had done it's job competently over the lat 6 1/2 years, this thread wouldn't exist.
     
    Brickbybrick likes this.
  18. Kangabanga

    Kangabanga Well-Known Member

    Joined:
    21st Jun, 2015
    Posts:
    1,241
    Location:
    Brisbane
    actually they did try to do the NBN and have launched a couple of satellites but like most other things we are often 10 years late to the party and always overbudget and big delays. There's just too much red tape and lack of a visionary leaders.
     
  19. jazzsidana

    jazzsidana Well-Known Member

    Joined:
    27th Jan, 2018
    Posts:
    455
    Location:
    Melbourne
    Summed it up nicely!

    Political system overall is a joke. Prepare for the worst & hope for the best..
     
  20. hash_investor

    hash_investor Well-Known Member

    Joined:
    11th Oct, 2015
    Posts:
    2,026
    Location:
    Sydney / Canberra
    The norwest metro was built under budget and delivered ahead of time :cool: