Stocks to crash up to 80% and real estate up to 60%.

Discussion in 'Property Market Economics' started by Sackie, 1st Mar, 2018.

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  1. Simon_S

    Simon_S Well-Known Member

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    If you truly understood out current circumstances you would understand where the opportunities lie. They won't be in property.
     
  2. petewargent

    petewargent Buyer's Agent

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    is this a trick question? the one that says 'currency & deposits'.

    increased to $1.1 trillion in the time this thread has been going on.
     
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  3. highlighter

    highlighter Well-Known Member

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    There are always opportunities in property. It's a thing people are always going to want.
     
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  4. highlighter

    highlighter Well-Known Member

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    Australia is a self sustaining economy, and so are most advanced economies. Even if investment demand drops away from property, this will tend to generate growth in other areas, which will benefit the economy. As property gets cheap, people will buy it again. It's all about supply/demand balance. That's not going to be mysteriously suspended. There is no good argument for an "end of times" or "never happened before disaster" economically. Economics keeps itself in relative balance and always has.
     
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  5. Simon_S

    Simon_S Well-Known Member

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    LOL.....Can you tell which sector 'OWNS" that Cash and Deposits?
     
  6. Simon_S

    Simon_S Well-Known Member

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    From RBA:2 Depressions and 1 Banking Collspse

    https://www.rba.gov.au/publications/rdp/1999/pdf/rdp1999-06.pdf

    The central argument of this paper is that variation in the performance of the financial system across the two depressions was primarily due to variation in the condition of the financial system prior to each depression. We show this by examining the behaviour of a range of indicators of financial stability over the decade prior to each depression.

    4 These indicators are:
    (i) the level and nature of investment;
    (ii) property market speculation;
    (iii) credit growth;
    (iv) capital inflows;
    (v) degree of risk management within the financial system; and
    (vi) competitive pressures in the financial sector.
    Each indicator suggests that the financial system during the 1880s was becoming increasingly vulnerable to adverse shocks. During that period there was a sustained increase in private investment associated with extraordinary levels of building activity and intense speculation in the property market. This was accompanied by rapid credit growth, fuelled in part by substantial capital inflows (much of which appears to have been channelled through financial intermediaries). At the same time, banks allowed their level of risk to increase in an attempt to maintain market share in the face of greater competition from a proliferation of new non-bank financial institutions.

    Evidence? How about rates rising at at Time of Record Debt Globally.
     
  7. Heinz57

    Heinz57 Well-Known Member

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    I love threads that have 2 or more different conversations happening at the same time. Kind of like eavesdropping at a party.
     
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  8. Simon_S

    Simon_S Well-Known Member

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    When its falling in value?
     
  9. petewargent

    petewargent Buyer's Agent

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    don't understand the question sorry

    reality in any event is that national data can't tell us a lot about risk e.g. in Spain most households kept paying their mortgages as the economy imploded. not saying Australia is the same as Spain, but it does show that ratios don't explain a lot on their own

    actually since this thread started the ABS reported that its previously reported split of household liabilities was misstated, which led to some quite large downward revisions of household debt, so it seems the ABS & RBA don't even know the real split/what's going on
     
  10. Simon_S

    Simon_S Well-Known Member

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    The question is directed to Perthguys assumption that all that savings and deposits will some how come flooding out to prop up the economy and property prices. Yet 30% of Mortgage holders have no Buffer in case of an adverse economic event!

    So once again who actually owns that money. Mum's and Dad's? Business? Corporations?

    Business will not invest or take on staff in a Downturn when they see the Economy contracting and future returns become threatened.

    Maybe you could explain how all this money will save our economy and how?
     
  11. BST

    BST Member

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    Interested to know what you're thinking?
     
  12. Simon_S

    Simon_S Well-Known Member

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    About? Anything specific?
     
  13. Perthguy

    Perthguy Well-Known Member

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    Reading a balance sheet is not terribly difficult. It seems very clear that "17.Financial assets - Currency" and deposits is "the money".

    Now, now Simon. That's not very respectful. Earlier I posted that you mock people who challenge you. You called that a false accusation. And yet, here you are mocking someone who disagrees with you.

    You have quoted stats from "ABS 5232.0 Table 34 Household Balance Sheet" which lists "17.Financial assets - Currency and deposits" and asked which sector "owns" the cash and deposits.

    The clue is in the title of the table - "Household Balance Sheet". It is households that "own" Financial assets - Currency and deposits reported in ABS 5232.0 Table 34 Household Balance Sheet.

    You asked:

    The answer is households not businesses. Businesses are not households.

    The Household Sector is not the same as the Business Sector and they are reported separately. Here is an example Household and Business Balance Sheets | Financial Stability Review – September 2012 | RBA

    If you actually clicked through, you would see that the ABS reported currency and deposits of
    $1,094.4 billion. This is currency and deposits held by households (not businesses).

    I will discuss the significance of this in the next post.
     
  14. Perthguy

    Perthguy Well-Known Member

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    Amazing! Every word of what you just said was wrong. Nice strawman though.

    Once again, the money is owned by households, not businesses and not corporations because businesses and corporations and not households.

    This is what I am curious about and something you have been unable or unwilling to answer.

    Why is it that a high level of household debt will drive the Australian Economy into the deepest depression that Australia has even seen but a record level of household savings (currency and deposits) will play no part in the recession and subsequent depression. Australia's level of household savings is close to Australia's GDP. I don't understand how you can say it is not significant and will have no impact if there is a recession. Where is your evidence to support your position?
     
  15. highlighter

    highlighter Well-Known Member

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    All property doesn't always fall in value. It's not a light switch with an off/on setting. Reliance on capital growth is also not the only way make money in property. It is a thing people need. It is a thing people can sell. Supply. Demand.
     
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  16. Perthguy

    Perthguy Well-Known Member

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    Perth property values have been falling in my area since December 2014. I have held property during this time, bought more property while the market is falling and also developed one of my sites. I have also taken on additional debt.

    If I had listened to the gloomers then I would be around half a million dollars worse off. As it stands my rent more than covers repayments at P&I. In the unusual situation that all my properties were vacant at the same time, my surplus disposable income (after living expenses) will cover P&I repayments indefinitely. Of course that would not be my preference ;) I also have a cash buffer in case it all goes wrong. I'm not worried. People can profit from falling markets if they know what they are doing.
     
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  17. Simon_S

    Simon_S Well-Known Member

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    That's for you to answer since you made the assertion that all that money will prevent the next downturn.

    Maybe you could explain how 30% of Mortgage holders who have no Buffer in the event of a negative economic event will manage to pay their mortgages?
     
  18. Simon_S

    Simon_S Well-Known Member

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    House prices fell from 1929 to 1946. Back to its pre 1920 levels
     
  19. Simon_S

    Simon_S Well-Known Member

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    The question is directed to Perthguys assumption that all that savings and deposits will some how come flooding out to prop up the economy and property prices.
    Amazing! Every word of what you just said was wrong. Nice strawman though.

    Amazing indeed. Here is your assertion:

    Lots of Assumptions in that statement masked as a question.....
     
  20. Perthguy

    Perthguy Well-Known Member

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    Oh, what nonsense. I have never made that claim. What did I really say?