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

Wrong. It was a genuine question. Why won't you even discuss household savings?

You are a depression historian, so you are well placed to educate us property investors about what happens to household savings in a depression.

 

@Perthguy - no point t arguing with people that don’t actually respond to your questions. Just use the ignore button and propertychat becomes a better place

 

In an Economic Downturn people do not spend because of the uncertainty. Nor do they borrow.

In Economic circles this is known as "Animal Spirits"

Animal spirits (Keynes) - Wikipedia

Others call it consumer confidence.

Is there anything else i can help you with?

On another note Harry Dents forecast of 80% falls for the stock market are very reasonable.

How you ask?

Great Depression hits bottom, July 8, 1932

Its all happened before.

 

Nice to come back and see my old thread in full swing .

 

Nah, this is Perthguy's favourite sport after building.

 

Well, they stayed relatively stable around the long term mean as a vague overall trend, in a time where debt was getting cheaper and unemployment was low. It's also not really relevant to include war time in this trend, as it's a pretty big confounding variable. Unless you're suggesting we're about to go through several decades of war.

During the time when house price growth was relatively stable, and yields were sitting around 8-10% as rental growth was quite strong. Why? Because landlords made money from rents and people needed to rent houses. The same effect was pretty stark in Dublin during the recession. When property price growth is falling, banks are less willing to lend due to relative risk, and people are therefore more likely to want to rent good homes, which drives up rental demand. Recessionary conditions also increase rents, as fewer people can finance loans.

Downturns don't end investment, they just shift the focus from capital growth, because the basic demand source changes from a mix of inexperienced investors and would-be home buyers, to mostly would-be home buyers and tenants. The proportion of experienced investors doesn't change much. Anyone capable of investing in a boom is capable of investing in a bust.

 

I personally think the opposite is true. Anybody capable of investing in a bust is capable of investing in a boom.

 

Yes, that's a better way of putting it.

 

Good luck finding out.

 

Oh, did you miss my earlier reply about Animal Spirits in response to why all those savings wouldn't support your idea that it would support the Economy and by default house prices?

Here it is since we are discussing your "Belief" or sorry "Question" of its impact on the economy.

Please feel free to ask as many questions as you like concerning said "Savings" and their impact on the Economy.

 

Again, that is not my position. You keep claiming it is but it's not. Repeating the same lie over and over will never turn your lie into the truth.

Your 'animal spirits' post also does not answer the guy's question.

To recap, you posted:

To which @BST responded:

Anyone with a modicum of reading comprehension skills would see that @BST is asking where the opportunities lie. You claim this post answers that:

I don't see how that answers @BST's query, in any way at all.

No, I just haven't had a chance to respond yet because I have an actual life.

Really Simon? I don't think you are in a position to be smug at this point. You hold yourself up as some kind of economic guru but yesterday demonstrated that you:

- do no understand the difference between household savings (cash and deposits) and household savings ratio (a measure of the rate at which Australians save) #107
- the difference between household wealth (cash, shares, property etc) and household savings (cash and deposits) #107
- can't figure out that savings ($1 trillion) can't include super because super is valued at ~$1.6 trillion and mathematically a bigger number can't fit inside a smaller number because there isn't enough room in the smaller number to fit the bigger number #107
- don't understand the business sector does not own the financial assets of the household sector #117
- can't read a household balance sheet to find cash, even though the cash is marked "Currency and deposits" #120
- can't comprehend that the household sector owns cash and deposits reported in a table labelled "household balance sheet" #130
- don't understand that businesses and corporations are not households #135

This is all basic stuff which you seem to have no clue about. It doesn't seem that you are in any position to be smug.

And I will respond to your 'animal spirits' post in a sec.

 

So that's the end of the story? Because it seems to me that there is a lot more to the story than that.

 

Seems to you?

Is that another question or is it an assertion?

No, its that simple. But you don't like that answer because it reveals your ignorance oh how Economies really work.You ultimately cannot provide anything at all to explain how 1 Trillion Dollars in Savings and Cash will save the economy. I always found Accounting boring But Markets and Economic is Fascinating. Especially from a Historical Perspective. Markets is where the really money is made. But since your so good at understanding Balance sheets can please explain what "Households" relate to:

6.Non-financial - Produced - Fixed assets - Machinery and equipment
7.Non-financial - Produced - Fixed assets - Cultivated biological resources(LOL....is that a Veggie patch)
8.Non-financial - Produced - Fixed assets - Intellectual property products
9.Non-financial - Produced assets - Inventories ( LOL.....is that Children)
10.Non-financial - Produced assets - Inventories - Private non-farm
11.Non-financial - Produced assets - Inventories - Farm
12.Non-financial - Produced assets - Inventories - Plantation standing timber
Financial assets - Other accounts receivable(LOL....Is that Wages)
30.Consumer durables

Really all that stuff? I'm glad you put your faith in the ABS.

Pointing to the Cash and saying see it there....And explaining how it works are not the same thing.

An Accountant can Count it. But wont tell you how it works.

 

If it was a question then it would have had a question mark Simon.

Nice Personal Attack.

Nothing in your post addresses any of my points concerning the forums sub forum title of
"Property Market Economics"

If you would like to discuss "Economics and Economic History" then do so instead of resorting to cheap shots and false accusations because you cannot put forward a well reasoned argument supported with facts as to why I am wrong on any point

Your position is that in an economic downturn consumers stop spending and that is the end of the story. That's not correct. If that was true then why are we not in a depression right now? If consumers stop spending and that is the end of the story then we would never have recovered from the great depression.

And you call me ignorant.

If consumers never start spending again then how is there a recovery? Under your model there would never be an economic recovery. And yet, after every depression or recession in Australia the economy has always recovered. How is that possible if consumers stop spending and the story ends there?

 

That is misrepresenting my position. I have never stated that 1 Trillion Dollars in Savings and Cash will save the economy and yet you keep insisting that I have stated that. This is a well known trolling technique know as "straw man"

"straw man
noun
noun: strawman

1. an intentionally misrepresented proposition that is set up because it is easier to defeat than an opponent's real argument."

Earlier you asked me to "put forward a well reasoned argument supported with facts as to why I am wrong on any point". I ask you to stop trolling me and stick to putting forward a well reasoned argument supported with facts. This is why I mocked you instead of engaging with you because I don't actually like being trolled. If you can't make your point without trolling then you must not have much to say. (not a question)

Then this should be easy for you. Earlier you posted Australia’s Declining Household Savings rate. What impact does a high household savings rate have on the economy?

 

Sorry if I have offended you i profusely apologise. Can be very hard to know over the internet what will offend some and not others.

Increased Spending and Borrowing leads to Booms.
Decreased Spending and Borrowing leads to Busts.

Does that make more sense to you?

Are you expecting a depression to be like a light switch? On or Off?

 

ah right, understand your question now - household balance sheet includes unincorporated enterprises, so where a sole trader has a bit of stock or small receivables then it's included in the h/hold balance sheet...which is why these balances are all small.

the cash & deposits balance of $1.1 trillion is all household cash & deposits, but where you have a sole trader with a bank account then it would be included within that.

 

Interesting attempt at spin.

I think this was my Original statement.

Is your question whether or not consumers spending less a negative impact on a Services Driven Economy? Or let me put it to you like this: If Consumers don't spend then what happens to Growth?

 

Bingo. Thanks Peter.

 

Is that an answer or a question?