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GFC or economic recession is looming for Australia ?

Discussion in 'Property Market Economics' started by Tekoz, 11th Feb, 2016.

  1. Tekoz

    Tekoz Well-Known Member

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    Based on historical economic cycle, The world is now due or overdue for a recession since the 2008 GFC and the worst thing now is global debt is growing fast. E.g. US National Debt in 2008 was $USD 9 Trillion. Today (2016) the US National Debt has grown doubled to $USD 19 Trillion and GROWING.

    This will end badly for the unprepared middle-income earners. When the next crisis hit, it will be much worse than 2008 GFC. BUT I don’t think it will be the end yet or NOT YET the Global Financial Reset due to collapse in Global Currencies.

    You will be familiar with these “Words” When the Gov and central bankers Start to PANIC:

    · “HELICOPTER MONEY” - PUSH the Money Printing button to Hyper-drive and give away free money directly to it’s citizen. The word used by Ben Bernanke ex Fed Reserve Governor. Swiss has already started with this idea by having a national vote this June 2016 to give free money to it’s citizen.

    · “NEGATIVE INTEREST RATES” to force the behaviour of it’s citizen to spend or invest. NOT SAVE

    · “CASHLESS System” easier for the government to control and freeze it’s citizen’s digital cash and AVOID BANK RUN – like what is happening on Greece and Cyprus long queue on ATM machines when Banks closed/ declare bank holiday because of CRISIS. Government / banks can limit your cash transfer overseas.

    The consequence of the above actions by Gov and Central Bankers will result in an EVEN BIGGER ASSET BUBBLE. Stock Market and REAL ESTATE will go through the ROOF. i.e. PROPERTY AND STOCK MARKET WILL BOOM after the initial collapse!!

    You may Why? This doesn’t make any sense. Well, In the above environment:

    Stage 1) The value of your currencies will be worth less and less due to massive money printing. This may create HIGH Inflation or the worst HYPERINFLATION.

    Stage 2) People start to realise/ wake up that Savers are losers!! Savers will be penalised by negative rate.. people do not want to SAVE.

    Stage 3) As people realise that the value of their money depreciated in value, they want to spend it quickly or They will use their saving to invest/ speculate in Stock market or Property.

    The REAL Hardship and Chaos will happens when Wages/ Salary do not increase as quickly as the HIGH inflation. It would then be impossible for the next generation to buy a home..!!
     
  2. Ouga

    Ouga Well-Known Member

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    Ah, it looks like someone has been reading some doom and gloom BS!
    Time to buy gold, go live bush off the grid!

    Mate, seriously, doom and gloomers have been around for years, you are wasting your time. If you really want to believe this, go follow the advice above because there is nothing else you can do.
     
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  3. Perthguy

    Perthguy Well-Known Member

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    lol. yes. Seems like a copy and paste from a doomsday prepper website.

    We had a huge recession in the early 1990s Australia. The recession was caused by high inflation, the recession didn't cause high inflation. lol

    Actually, none of the thing predicted above happened.

    What can we expect in the next recession? House prices falling, rising unemployment, higher business failures and higher mortgage defaults. I'm in Perth and all of this is already happening. One analyst said the WA Economy is basically in recession already. It's not pretty but it is fact of the aftermath of a boom. WA enjoyed a boom that lasted over a decade. Some pain will follow with recovery after that. How long was the Australian economy prosperous for after the last recession?
     
  4. Bran

    Bran Well-Known Member

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    What the freak have you been reading Tekoz? Chillax man. Can you really see hyperinflation as imminent?

    How's your Park Ridge place going?
     
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  5. Hanison

    Hanison Well-Known Member

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    Read the statistics of wealth in Australia. Average super fund, average cash at bank, average net worth, etc, etc

    It won't be hard for people to lose everything because statistically the majority of people don't actually have a whole lot of anything to lose.

    Average take home wage in Australia is $27 per hour, post tax.
    Average price of 1kg of red meat is $23 per kilo

    Average person in Australia who does nothing else but go to work and come home each day can aspire to increasing their worth by the value of red meat.

    Is your life goals and ambitions worth the value of red meat ?!

    A sobering thought for some I should think.

    PS. OP, you post garbage, you get rubbish response.
    You have now stolen some red meat from me that I will never get back.
     
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  6. Tekoz

    Tekoz Well-Known Member

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    @Bran Yes mate, so far it's progressing nicely. Looking forward for it to be fully built and then tenanted so that I can get CF+ from the Depreciation as well.

    Apart from that, I've been reading the good book that warns me about the impending crisis.

    Back then 2008-2009 Australia was dodging the bullet Thanks to Chinese resource demand. But now there is nothing shielding us from any bullet :confused:.
     
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  7. Tekoz

    Tekoz Well-Known Member

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    @Perthguy and @Hanison guys, I'm not copy pasting or trying to making it up.
    All of those points are based on the last few weeks of reading and researching quality books along with the extensive research of the economic market and its historical data.

    I'm trying to share some information that I have digested and analyzed so far so that I can get some feedback whether I'm in the right direction or the timing is not right at the moment.

    But believe me it will happens in a matter of time not just BS.
     
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  8. Tekoz

    Tekoz Well-Known Member

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    @Ouga mate, Yes, I'm serious, I did not copy paste this information from any source. Please check it yourself using Turnitin if you want :cool:.

    I've done my research hence I'm sharing it here for educating people about the danger of economic recession.
     
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  9. MarkB

    MarkB Some guy on the internet Premium Member

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    The screen you are reading.
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  10. Scott No Mates

    Scott No Mates Well-Known Member

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    Australia dodged the bullet with the gfc as we rode the mining boom and property boom. I have to agree that we may not be so lucky this time around.
     
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  11. radson

    radson Well-Known Member

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    Whats Australia's current unemployment rate, inflation rate and economic growth 5 years after the peak of the mining boom? i.e Iron Ore peaked almost exactly 5 years ago and has dropped ~80% since.

    Isnt it something like 5.8% unemployment and falling, inflation at 1.5% and GDP growth 2.5% p.a. Not fantastic but not end of the world either.
     
  12. Barny

    Barny Well-Known Member

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    @Tekoz its great that your educating yourself as you should. I have been also reading up as much as I can about economics, bubbles, our economy, China's and Americas. Currently reading, Devil take the hindmost, a history of financial speculation.
    I've noticed the more you read, the more questions it brings up, and it can defiantly put you into a negative state.
    It's great that you shared the info, going by the last 2 recent threads you started, it comes across like your stressed out.
    Everyone will have a different opinion on the matter, but as long as you are prepared and haven't leveraged yourself to the hills, you will be fine.
     
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  13. Perthguy

    Perthguy Well-Known Member

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    Sorry, I thought your post was a gee up, which is why I didn't respond to it more seriously.

    >> Stage 1) The value of your currencies will be worth less and less due to massive money printing. This >> may create HIGH Inflation or the worst HYPERINFLATION.
    Massive money printing is a very unusual reaction to a recession. I would rate the changes of this happening in Australia as extremely low. Go back and look at the economic conditions that caused the last recession in Australia. Then have a look at Howard's response to the recession. The Government's response was to reduce government expenditure, not increase it. They also prioritised a return to Budget surplus. We have a conservative government in Australia and when the economy slides into recession, the changes they will try to get out of it by printing money are virtually zilch.

    >> Stage 2) People start to realise/ wake up that Savers are losers!! Savers will be penalised by negative >> rate.. people do not want to SAVE.
    Negative interest rates in Australia are equally as unlikely.

    >> Stage 3) As people realise that the value of their money depreciated in value, they want to spend it
    >> quickly or They will use their saving to invest/ speculate in Stock market or Property.
    That would assume massive inflation and negative interest rates, which I find extremely unlikely.

    >> The REAL Hardship and Chaos will happens when Wages/ Salary do not increase as quickly as the >> HIGH inflation. It would then be impossible for the next generation to buy a home..!!
    In the unprecedented boom that occured prior to the last recession, wages were not keeping pace with inflation and yet there was share market bubble and housing bubble at the same time. This time around, it is far more like that house prices will drop, they already have started to, and that will make housing more affordable.

    It is worthwhile having a look at the economic conditions that resulted in the last recession we had in Australia. Prior to the last recession we had high unemployment, high inflation, high government debt, a stockmarket bubble and a housing bubble. To address the issue of high inflation, the government raised interest rates until the cash rate reached 18 per cent in the second half of 1989. Basically economic growth and inflation were out of control and a recession was inevitable.

    The real reasons why it was the 1990s recession we had to have - Business

    Assuming the economy is heading into a recession now, our economic conditions are virtually the opposite of then. Unemployment is realtively low, inflation is low, interest rates are low. Share prices and house prices have already started to fall. This is going to be a very different recession to the one we had last time around. I don't see any indicators that the government will respond any differently though. I certainly can't see a conservative government printing money and causing high inflation.
     
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  14. 2FAST4U

    2FAST4U Well-Known Member

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    5.8% unemployment sounds good on the surface, but the real problem is the amount of underemployment in the economy. Furthermore, long-term unemployment is at the highest levels since the 1990's and is increasing so people that are unemployed are becoming locked out of the market. Even if you do have a job it's the uncertainty that surrounds it- 4 million Australians are now working as either casuals or temps. It's certainly not the end of the world though and there are jobs out there- just not with very good employment conditions (security).

    Personally I don't think Australia has any chance of having a recession unless our population growth drastically decreases. For all the doom and gloom people are still out spending and the recent Westpac consumer confidence survey was fairly positive, as was recent retail spending. Some industries, such as construction, may take a hit though as building approvals are starting to decline. In terms of property it's certainly not going to stop me investing.
     
  15. Perthguy

    Perthguy Well-Known Member

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    The impression that I get is that the Australian economy is limping towards recession. If the economy does slide into a recession, it will be with a wimper, not a bang like last time. Recall that all it takes to be in recession is for GDP to fall for two consecutive quarters. In Sep 2015, it was reported that the GDP only grew by 0.2 per cent in the preceeding quarter. It's not a huge leap to go from there to a technical recession.

    Still, the changes of that happening seem relatively low. In September last year Goldman Sachs rated the chance that Australia would enter a recession as one in three. Since that report, the 2015 Q3 results indicate a GDP growth rate of 0.9%. Still weak, but up from 0.2%. There is a chance the economy will just limp along at a sub 1% quarterly growth rate for some time until an economic recovery.
     
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  16. barnes

    barnes Well-Known Member

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    Where is that recovery coming from? If China tanks, there is no more help from elsewhere. And China is tanking... Slowly but surely...
     
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  17. radson

    radson Well-Known Member

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    China is not growing as fast as it previously did as its economy matures although in aggregate still massive expansion. China is 15% of the worlds economy albeit providing 33% of recent economic growth. There is a world outside China. Look at South East Asia, and India for their high growth rates. The USA has low unemployment and steady growth.

    China is very important but its not everything.
     
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  18. barnes

    barnes Well-Known Member

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    China is everything for Australia unfortunately. I don't know any American made product which is sold here except a few new Mustang cars. USA doesn't produce a lot of goods anymore.
    Have you ever been to India?
     
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  19. Bran

    Bran Well-Known Member

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    What about India?

    The last 'good book' continues to retard progress, 2000 years later. Don't let the latest one ruin yours. ;)
     
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  20. Perthguy

    Perthguy Well-Known Member

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    I take your point. I don't have any faith in the Chinese economy either. However, if you read what I said carefully, "There is a chance the economy will just limp along at a sub 1% quarterly growth rate for some time until an economic recovery". "for some time" could be a month, a year or a decade. I put no timeframe on this.

    At some point in the future, be it years or decades, either the Chinese economy will recover to the point where they start buying Australian resources again, or another emerging economy (such as India) will overtake China as Australia's primary export destination, or other countries collectively will buy enough Australian exports so that the economy starts growing again rather than going backwards. At the same time, the Australian economy could be diversified to the point where it is no longer so heavily reliant on the resources sector. This won't be a quick process.
     
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