"The Crash" has been called... end of 2017.

Discussion in 'Property Market Economics' started by Perthguy, 23rd Oct, 2015.

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  1. radson

    radson Well-Known Member

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    Yeah Henry Ford has a lot to answer for, that's for sure :p
     
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  2. ollidrac nosaj

    ollidrac nosaj Well-Known Member

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    Interesting, I can't remember if it was an article or I heard it on a podcast recently, that also made the same claim. They stated subsidy to Large companies had a 4 to 1 return in the economy. (economic modeling on car industry subsidy also shows this return, so probably accurate). They also claimed the equivalent subsidy distributed through welfare recipients returned a 6 to 1 multiplier effect.

    On the topic of low wage growth. IMO there is surely a correlation between the decline of the union movement/unionised industries and wage growth. (I know people have strong opinions on unions, for and against). I believe the unions were the main driver not only for wages but also the full time job security (now in rapid decline) in middle class Australia. The benefits of raising the standard in those industries also flowed on to non union members and non unionised industry.
     
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  3. WattleIdo

    WattleIdo midas touch

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    Agree that this appears to be a thoughtless move by S&P when some of these 2nd tier lenders put the Big 4 to shame in terms of financial management. BOQ has its merits and I know that Teachers Mutual Bank has again been given some kind of award for ethics which is carried world-wide.
    S&P have made assumptions about the Big 4 being 'too big to fail'. Does this mantra carry water in Australia, I wonder?
    This could be the game changer with S&P not only talking up a recession but urging it on. Although a downturn is inevitable at some point, please make decisions based on reality, not assumptions. S&P have given the the Big 4 the go-ahead for business as usual and, as we know from our friendly brokers, they are far less constrained than some of the better quality 2nd tiers.
    On the plus side is the potential for an upgrade. And the fact that the Australian property market is the Australian property market.
     
  4. WattleIdo

    WattleIdo midas touch

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    Hard to know isn't it, as a lot of these savings are in offsets. And now we find out that our savings are not as safe in offsets as we thought they were because if the bank goes belly-up they take your offset with them.
    Obviously that's extreme and we seem light years from that at present.
    The main point is that there are plenty of funds to offset the debts. However, I've just used two of my offsets to pay out one of my smaller loans. In some ways, too much offset creates smoke and mirrors. o_O
     
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  5. ollidrac nosaj

    ollidrac nosaj Well-Known Member

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    Here's another vid you might like, sums up the rating agencies quite nicely.

     
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  6. Trainee

    Trainee Well-Known Member

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    Where does it say that? Worst case is that the offset balance is offset against your loan.
     
  7. WattleIdo

    WattleIdo midas touch

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    What happens when bank shuts down?
    Where does it say that? With a redraw, yes.
     
    Last edited: 28th May, 2017
  8. Perthguy

    Perthguy Well-Known Member

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    Of course this is a risk and it is one that all property investors should know about. However, there are risk mitigation measures that can also be planned for. One is using the funds in the offsets to pay down loans, which is exactly what you have done.
     
  9. Jaggannath

    Jaggannath Well-Known Member

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    Interesting thoughts re. unions and unionised labour. I think they're on the nose because of the behaviour of the union members who move into parliament, and seem a self-interested bunch.
     
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  10. ollidrac nosaj

    ollidrac nosaj Well-Known Member

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    Yes unfortunately any organisation is open to be used and abused from those interested in self promotion/profit.

    The unions have been squeezed hard from the right since the era of Reith/howard industrial relations and the adoption of Trickledown style economics. But putting aside Politics and looking at it purely in the framework of "supply and demand" economics. The push from the "demand" side has always been driven by the union movement and its diminishment will cause an imbalance.
     
    Last edited: 28th May, 2017
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  11. rambotrader

    rambotrader Well-Known Member

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    Lindsay David, co-founder of LF Economics seems to have gotten it right. Read comments from posters tearing him down in 2015. My what a difference 2 years makes.
    If there is another GFC or anything approaching that sort of even expect Australian property prices to drop faster than a bullet train in Japan. It will not be pretty as pundits get out at any price.
     
  12. paulF

    paulF Well-Known Member

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    What is it that he has gotten right?!
     
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  13. Perthguy

    Perthguy Well-Known Member

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    That's a big if. If there is no GFC then has Lindsay David got anything right?

    Don't forget that Lindsay David has called for a major crash in property prices by the end of 2017 resulting in one of the big 4 banks going bust or being bailed out. So far, he hasn't gotten anything right. By 1st Jan next year we will have concrete evidence as to whether his big call was right or wrong.

    I wonder if his fans will care if he got it completely wrong again? I doubt it.
     
  14. Perthguy

    Perthguy Well-Known Member

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    Good question. I don't think GDP is actually as strong at the headline rates, which are very low anyway. The booms in Sydney and Melbourne are hiding a rather grim economic picture around much of Australia. For example, Perth had massive wage increases during the mining boom. Post mining boom with the WA economy dipping in and out of technical recession, wage growth has had to stagnate to match the underlying economy. This distorts the Australia wide stats. Overall, Australia is suffering from a post mining boom slump and this is why wage growth is so low and underemployment is so high.

    Haven't had a pay rise in a while? You're not alone
     
  15. ollidrac nosaj

    ollidrac nosaj Well-Known Member

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    Yeah sure everything in the economy is correlated, nothing performs in isolation. This is not a radical hypothesis but a basic economic fundamental. I'm assuming the book worthy twist Is "goes down" is referring to scenarios of economic Armageddon?
     
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  16. Perthguy

    Perthguy Well-Known Member

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    I think @Barny has read the book so maybe he could comment?
     
  17. Barny

    Barny Well-Known Member

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    7 months to play out.

    If it
    Think I posted many pages prior regarding the book, it's not a bad read, gives examples on how it can all play out and why it will.
     
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  18. Perthguy

    Perthguy Well-Known Member

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    So if there is no crash as predicted by the end of 2017 then do purchasers get a refund? ;)
     
  19. Barny

    Barny Well-Known Member

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    I think he will do what steven keen did and just add another year or 2 till the crash occurs, then blame the government for his wrong timing as it was them for keeping the bubble afloat with free stamp dutys and superannuation schemes for first home owners.
     
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  20. hungusyd

    hungusyd Well-Known Member

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    I think it is starting from the NW. I inspected a house in Bella Vista on Sat. Open house only had like 3 4 groups inspecting. Agent quoted 2.3-2.5M. It's one of the most beautiful house I'ver inspected. Got a call from agent on Sunday and then on Monday saying that 2.2M will do. I'm tempted but I think I can wait a little longer for it to be closer to 2M
     
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