Thoughts on Nathan birch's 2018 recession theory

Seems to me if I had the massive level of debt that Nathan admits to and I believed a depression to rival 1929 was about to arrive, then I would be deleveraging as quickly as possible. Of course, this is assuming he actually has some equity to realise, which I suspect he doesn't.

There is little point in claiming the government is going to stimulate the economy through a 1929 magnitude depression. We were saved in 2008 by aggressive rate cutting by the RBA (from 7.25% to 3% in the space of 11 months) and massive stimulus from the Rudd government, which at the time had a total government debt of some $60 billion.

Now we have a cash rate at 1.5% and a government debt somewhere north of $550 billion. Where is this stimulus going to come from, Turnbull's credit card?

The RBA and federal government have painted themselves into a corner. The only tool left is maybe quantitative easing (printing money) which will destroy the AUD.

I believe that Nathan is right, it is about to hit the fans but as for the government being able to deal with it, no way. Most of their chips are already on the table.

 

Very true! Nathan believes there will be a rise interest rates which will then blow up the system and they will have to bring it down even further could result to 0% interest rates if not negative, which in the process boosting with even more QE then last time in 2008-9

 

You can always run the numbers to "stress test" yourself. Add 3 percent to your repayments, allow for a drop in income etc...

 

Intersting times
Negative Interest Rates

Negative interest rates who would have though.

robert Kiyosaki
says savers are loosers now days.

 

Thanks hammer, yep i do these also. The bank pretty much puts the 3% on every new loan anyway to test, personally i would be okay as long as both do not happen simultaneously for more then say 6months

 

Alot of "etc etc" "yadda yadda" "this and that" in the video. Why not just be definitive and accurate?

 

I agree its alot of rambling

 

At least he ditched his fidget spinner this time.

 

I can't see a recession yet...but you know what property in some parts of Sydney is already down 10-15%...add to that rents dropping 10--20%...I/O terms running out...and you have a fire.

As I have said previously....the end of 2019 is going to get really interesting. Lots of people cannot borrow as much...that is going to cap prices in places like Sydney.

 

I fink hes aimin bit f..ing lower than that maaaate ..

cliffff

 

Spot on! I did believe the market will bounce back to previous high's 2nd half of this year then prices will really start dropping in 2019, i'm eating my words...

 

Thanks Sash, what would make rental drop? i generally thought even though property did have a drop the rental income would be the same, as there would still be the same amount of demand in people renting?

 

If there's money to be made out of stating the bleeding obvious, then good for him, I guess

 

Demand for people renting in a downturn can drop. i.e. shared houses and kids move back with their parents. I kicked my last lot of tenants out because they ended up with 6 adults and 6 kids sharing a 3 bedroom house!

 

Jesus, were they my people? I once bought a block with 2 dump 2x1 duplexes on it and one had 6 Indian students in it

 

I think they were Indonesians from memory. They were neat and clean but obviously 12 people in a 3 bedroom house is going to create more wear and tear over time so I asked them to leave. The new tenant is a single mum with 3 kids and keeps the house immaculate. It is cleaner now than when she moved in and that was after 3 days of scrubbing because I always hand over very clean houses.

 

I see, that makes sense thanks

 

You could also have given them a hefty rent increase

 

I wouldn't've thought that analysis was not really his forte. He really should credit his mentors for teaching him terms like 'derivatives imploding' and 'quantitaive blah blah'.
Despite having all the terminology, it doesn't make sense. As already mentioned, what stimulus? The massive infrastucture projects all over the place are providing ongoing employment. This is the best stimulus we can have.
I do agree that most of the housing market will drop, even more than it has already. Don't have to be Einstein to work that one out. But it seems that affordable and gentirfying areas such as Frankston might rock on. Fingers crossed.
My unsolicited analysis? Seems to me that prices will be down while everyone who wants a job works. Property investors will be paralysed (holding debt more than 4 times your nett income?)as FHBs pick up the bargains. Basic values will become mainstream again. Retail may be suffering however? I think that may be a bit of a drag.

 

You never know how much impact goes with public information ,and any news shared with thousands of people most times is useless..Plus I have worked through the last recession under Labor and the high taxation that also comes with any recession,but they don't happen overnight unless you go and see a hernia specialist first..