The state of our finances

JPMorgan’s complete guide to everything going on in Australian and global markets

 

If the latest talk of Negative Gearing is brought in, and property values decrease by the forecast 2%, what effect will that have on the large grey part of the left-hand graph. After all, popular media and Labor now have Treasury figures informing us that the removal of neg gearing will reduce housing values by 2%. They do realise it will reduce everyone's house values, not just the value of homes being sold to FHBs in Sydney and Melbourne.

 

My goodness I can feel the pain coming to many already.

 

Who really cares about 2%? It's a drop in the ocean compared to the 50% - 100% increases over the last 5 years. It's not going to make housing more affordable for anyone, it's not going to create massive negative equity problems, it's not going to give people the opportunity to buy houses if they can't now.

All it will do is mean investors miss out of a few thousand dollars in tax deductions per property. Many will look to make that up elsewhere, we may see people becoming more aggressive on rental increases. If negative gearing is grandfathered, then even that probably won't be a big deal, although investors will probably be more aware of rental increases...

 

I have no idea what I'm looking at. How bad is it?

 

FFS well said. +1.

 

I was being sarcastic! That comment was a few weeks ago and lost on anyone who wasnt involved in the "other" threads that same week.

Way I read the graph above is that Australia's liabilities are a non event.

 

Despite all the doom and gloom in the media and macrobusiness, Australian consumer finances are actually in reasonably good shape. Although the rate of savings has dropped recently, it is nowhere near the lows of 2000 to 2005. In addition, the interest payments to household disposable income ratio is completely manageable.

Bear in mind that this is Australia as a whole. Individuals may range from super rich to virtually bankrupt.

The point of the table is that we are not in the dire financial situation that is made out by many in the media/alternative blogging sites.

 

But ....are you suuuure.....

 

I was just kidding. In reality, Australia is on the brink of the worst depression in the history of the multiverse and everyone is broke. No point sugar coating it.

 

I literally sharted when I saw that graph.

What many don’t realise is that the people with the savings are not the ones with the debts?

Do you understand that?

It means the graph is useless beyond telling us the debt is massive.

A decade of trillions thrown into unproductive housing debt.

What a basket case banana monarchy

 

not much different from other developed nations
Its how the rich make money whilst the masses get hooked on ever increasing debt that they spend their lives paying off..

 

How would you know? I happen to have savings and debt. How many other Australians like me? You would not have a clue.

Unless that housing happens to be in Gimble Way, South Karrinyup of course.

 

It's true. That means they are all in crisis or not.

It's a case of dammed if you do and dammed if you don't.

If consumers get into debt to spend in the economy then that is supposed to drive economic growth and be good. Until the debt becomes unmanageable and then it is a financial crisis. Everyone is going broke and the economy is on the brink of recession.

If consumers save then that is contractionary. The economy suffers and a recession is inevitable.

The reality is that we should have had a Recession in 2007/08 but the government decided to buy us out of it. At some point we have to pay the price for that. Who knows when?

 

If you have savings and debt and it’s not in an offset then that’s not smart.

But in that case we have a bigger problem and why I want a national identity card for everyone over 16.

That identity card is linked to every property you own, rentals you live in, bank accounts, stock market, car, place of employment, everything.

Then the government would have at its disposal the real picture of the economy and how many houses there are and how many rentals there are who is unemployed and how many people there are.

You could plan the growth of this country properly and actually stop being a third world banana monarchy

 

In general this should be true.

People with debt don’t have savings or else they would have no need of the debt.

Even tax deductions on investment properties are an illusion because it just means a marginal tax rate discount on your property expenses. The interest over the years will negate that saving anyway. You are still better off paying the full sum of cash when buying a property.

 

Unequvically, absolute rubbish . I and many, many others have made millions in equity by doing opposite to what you've said .

 

Have you tried dealing with the ATO lately? They want us to "register" for some computer thing that links to our medicare and centrelink records.

 

That is just flat out wrong. I already told you I have both debt and savings and I know other people do as well. My investment partner does and both of my parents do. So already that is 4 people you claim do not exist. Time to admit you are talking nonsense.

 

Yes and your generation could do it only because you lived in a period of decades of credit expansion that the modern day kings have encouraged so that in the coming decades they will have enormous wealth and resources to allow their plans to flourish. But your wealth has come at a cost of great stress and hardship for young families and they don’t have the same opportunity. If I know one truth it’s that karma is coming.

One can’t oppress somebody and think one has got off Scott free.

I on the other hand am talking about normal economies not banana monarchies like Australia where the economy is subsidised by debt and taxpayers money and everyone thinks they are smart because the country is doing well. AUSTRALIA is degenerating, we are devolving, but the rich get richer in the process and so people think it’s progress.