By: pol_pak
24/05/2008
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I am not sure I believe everything in
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Government's 'numbers racket' is about to blow up in our faces
Flash forward: Real life, Washington, new leaders, a new Congress, old wizardry. Be
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However it certainly set me thinking ;-)
IMHO all Reserve Banks and equivalents are nervous, statements stress their concerns which determine their actions is NOT to protect a few banks, rather IS to protect the greater monetary system.
We can afford to lose a few banks, however a total loss of trust in the monetary system would truly be catastrophic for everyone, everywhere...
Money is one of the great services of civilization, else we are all back to trading bags of wheat for a cow...
. |
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By: seabirdauau
23/05/2008
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Jeez Pol I am intruding again and only within minutes of the previous ramblings. But then it is still raining and blowing!
I do not believe that "Flash forward: Real life, Washington, new leaders, a new Congress, old wizardry. Be forewarned: No matter who's elected president, America will soon see a massive statistical curtain pulled back, exposing a con game of historic proportions."
The world knows the Yanks are deep in the brown stuff but they (the world) and they (the Yanks) will not pull back any curtain(s). The world can not afford to while the Yanks have been getting away with it for years so just WHO amongst them would be prepared to stick the old proverbial neck out only to get it lopped off?
The list of countries living beyond their means (including Australia) is unbelievably extensive and who would be the first to call in these debts?
I have said it before and say it again, maybe not in the same correctness, but:
"And when that happens, you and I will suffer another ear-splitting global meltdown, bigger than today's housing-credit crisis, dragging us deep into a recession and bear market for years."
will come but not from any Yanks or anyone else for that matter pulling back any damn curtain(s)? |
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By: seabirdauau
23/05/2008
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Pol I like your posting, when I get time to read them, however as heavy rain has intruded on both my golf and fishing, I have found time to dispute your reasoning regarding property investment.
Surely rental on a gross basis comes in around that comparable with the return from share dividends? Renters doing a runner must equate to poorly managed companies reducing/omitting their dividends?Property income can be offset with substantial taxation advantages while share dividend rely almost solely on franking alone? Investment in property rests heavily with capital gains very similar to shares with these expectations affected by similar "intrusions" of market variability? Surely property investors overextend themselves no further in a bull market than share investors?
I recall the eighties period of 20% where from my experience the over extended home owner suffered more than the property investor?
But then I am a dumb b....... |
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By: pol_pak
23/05/2008
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Government's 'numbers racket' is about to blow up in our faces
Flash forward: Real life, Washington, new leaders, a new Congress, old wizardry. Be forewarned: No matter who's elected president, America will soon see a massive statistical curtain pulled back, exposing a con game of historic proportions. And when that happens, you and I will suffer another ear-splitting global meltdown, bigger than today's housing-credit crisis, dragging us deep into a recession and bear market for years.
Go read rest at http://www.market(DELETE)watch.com
PAUL B. FARRELL
Megabubble waiting for new president in 2009
'Numbers racket' exposes potential disaster for economy, markets
http://www.market(DELETE)watch.com/News/Story/Stor y.aspx?guid=f91a084369b44c0c92ceb835d9907945&sitei d=nwhpf |
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By: pol_pak
23/05/2008
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Several long term cattle property owners in the NT have sold recently. Elsewhere comments made they taking advantage of current prices after a long period of low valuations.
Buyers expect valuations and or returns to keep rising...
Certainly Mal Brough efforts to push land councils towards issuing leases dragged reluctantly a wider change in attitudes, which despite a lot of rhetoric from Jenny Macklin she appears to be maintaining. |
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By: pol_pak
23/05/2008
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Rents being less than half of interest costs relates to the investment loans taken out.
IF being sent bankrupt by mortgages going over 10% need consider whether original mortgage was over extending.
Failure to make such calculations is why so many corporations and individuals are suddenly over extended.
Investors NOT prepared to overextend were being ridiculed as NOT understanding how financial system had changed.
Changed to ignore how historically interest rates range widely.
We all love rates being down however realistically need always consider their rising back to historical highs when making our investment calculations.
Shortage on rental properties is because fewer investors were prepared to invest in rental property.
This for a variety of reasons.
Easier loans available encouraged people to purchase their own homes in preference to rental; Raising expectations amongst prospective landlords of a reduced rental market.
This along with period of tennant rights, discouraged potential landlords from entering the market.
, |
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By: contratrad
23/05/2008
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Hello Al,
Excellent Posting again !
A friend of Mine was happy last night because he and his Partners have sold a Cattle Property in the N.T. and he said they were just ' Fed Up ' with the ever increasing Interest Rates along with other costs like Transport etc..
That may be ' Food for thought' for You and other People.
Mr. Glen Stevens , the RBA, and Government are all 'out of touch ' !
The way ahead is to use improved Banking etc. Regulations through A.P.R.A. to tighten up on the excessive Lending Practices and this is where the Government could show Leadership.
The P.M., reminds me of an ' Imposter ' by the way he 'ducks and weaves' the Real Issues . ( Like the Government presently taking 38 Cents plus G.S.T. from each Litre of Petrol ).
A very concerned,
contra |
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By: almurrie1@y7mail.com
22/05/2008
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Exactly Reynard!! And why did they do this? To enable all those poor lenders to actually pay back the loans, because there is no actual money left in the system to do this with. The Banks create money out of nothing. You borrow, then you pay back plus the interest. If the interest wasn't there to start with, which it wasn't, you have just created money when it gets paid. So if there isn't any there now, how do you pay it back? The banks loan on promises eg bank cheques, but sure as hell want it paid back as cash. They don't take promisary notes from ordinary punters eg an IOU. So in comes the Reserve with an injection of its freshly printed notes from the Mint and there you have the cash to pay your interest. Probably be a billion dollars this year.
Answer: We need to control inflation by restricting loans to a sensible level and stop the Reserve from causing so much inflation. Not punish everyone with a loan by completely unreasonable rises. I am being set up to go bankrupt if mortgages go over 10%, and the rents presently are less than half of the interest costs. So stuff those who talk about greedy landlords. The rents will have to go up and workers will simply have to get catch up pay rises or default on their credit loans etc too. The whole system is crazy - low interest in USA to stop from crashing and burning and to Hell with inflation, but high interest in Australia to stop inflation, and send us all crashing and burning!!!
Al |
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By: contratrad
21/05/2008
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Good One Alst12,
So my spelling of 'Muscet' was incorrect, however I imagine You appreciated my point' regarding the out of date of Weapons' at the RBA.
A very concerned ,
contra |
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By: alst12
21/05/2008
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Hello Contratrad
A muscat is a type of grape - I hope the Reserve is not not trying to fight inflation with one of those! Trying to fight inflation with a musket might get a better result than the grape approach
A more concerned Al |
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By: reynard2008@y7mail.com
21/05/2008
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this is the real culprit - the real cause of inflation - the RBA itself:
RBA stats
M1
2005 $764,467,000
2006 $841,183,000 increase $76,716,000 (10.04%)
2007 $961,046,000 increase $119,863,000 (14.25%)
M3
2005 $678,360,000
2006 $747,280,000 increase $68,920,000 (10.16%)
2007 $867,883,000 increase $120,603,000 (16.14%)
what happens if you increase money supply by 16% per annum? |
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By: pol_pak
21/05/2008
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IMHO Malcolm Turnbull presented well at Press Club today.
Re PATKEN FINANCIAL LOAN OFFER
Did this message offend you?
Yes
This at least should replace thier advert ;-) |
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By: pol_pak
18/05/2008
7:55 am Yahoo! Profile:
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PAUL B. FARRELL
Six reasons 'Lazy Portfolios' beat market timing
Paulson says 'worst over' ... but is it a bull or another sucker's rally?
http://www.marke ***
http:// www.market[delete this gap inserted here]watch.com/News/Story /Story.aspx?guid=ff21c84a 5f27420e8f893797fb264f5e& siteid=nwhpf
snippet:
The legendary Wall Street historian Peter Bernstein, author of "Against The Gods," say "people who think we will have turned in 2009 are wrong ... there is too much to unwind."
Yes, he's implying we're in for a recession until at least 2010. No surprise, the last one was almost three years. So we'll be lucky if this one ends by 2011. Till then, the indexes could sink a lot further. Maybe go up occasionally suckering us back in. Maybe go sideways for a long time, like back in the 1970s. |
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By: contratrad
17/05/2008
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Hello Pol pak,
The following Quote from a spaech from Mr. Glen Stevens proves once again that increasing Interest Rates also increases Inflation therefore more control of Lending by extended powers within A.P.R.A. would be the best way to limit Inflation.
The Quote:- '
He said Australia's price pressure problems now were not as bad as in the 1970s.
"Even with the recent surge in consumer prices taking the inflation rate to a bit over four per cent, things are not like there were in the 1970s," Mr Stevens told a University of Sydney alumni dinner.
Mr Stevens said inflation could rise to 1970s-type levels if a target band was not obeyed.
"It's easy to say `why not raise the target?'," Mr Stevens said.
"That was the previous thinking of the 1970s. That's how we got 10 per cent (inflation), it's too big a liability."
Between 1970 and 1979 the average rise in the CPI was 10.7 per cent a year, which eroded the value of money by 60 per cent over the period.
JPMorgan chief economist Stephen Walters said the governor's speech indicated rate cuts any time soon were "out of the question".
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Read rest of article !
http://au.biz.yahoo.com/080516/2/1qt9c.html
/ End Quote
Mr. Glen Stevens and the RBA are fighting the War on Inflation with just a 'Muscat' (a vey old Gun) when in fact they need some modern weapons.
(I guess the Government should do that ,rather than Sack Him ).
A very concerned ,
contra |
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By: almurrie1@y7mail.com
16/05/2008
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Pol
I guess these answers are available somewhere but the point I was making was that there are new possibilties for cash strapped banks to convert their long term housing loans (with all the risks involved) into secure US treasury bonds which can then be traded for cash if needed. The fact that they did not take advavtage of the full amount available means they are now betting their loans will outperform US bonds. (Either the worst of the housing problem is over or bonds aren't as secure as people think and the US is in for more hurt). This would give the banks options to either issue more secure loans, or use the money to retire debt. Either way they are in a better position to make huge profits when the interest rates on their past lending goes up, which WILL eventually happen in the US, and then the banks will again shift money from the poor and middle class into the pockets of the rich. Like what is happening at the moment in Australia. In Aus I would have thought some sort of regulation on how much lending banks could do is best to slow inflation, rather than up the interest rates on loans. This just gives the 2/3 with money in the bank more to spend, which must hurt inflation more than a little, and also pushes up CPI for housing, rents etc which actually made inflation worse. Like pouring petrol to put a fire out. Crazy.
Al. |
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By: pol_pak
16/05/2008
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By: almurrie1@y7mail.com
In the US the Fed is "auctioning" off bonds in exchange for mortgages, ie turning 25 years of future payments into liquid cash ($835 billion in the last round).
- -
What are they getting for these bonds ?
Assumption unlikely to be for all repayments to be recovered.
What risk allowance factored in compared to received if these repayments were like US Gov Bonds guaranteed fixed income over a period of time ? |
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By: pol_pak
16/05/2008
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Stevens' speech sparks rate rise talk
Friday May 16, 2008, 12:12 pm
Reserve Bank of Australia (RBA) governor Glenn Stevens' reminder about the damage high inflation caused in the 1970s suggests the central bank remains ready to lift interest rates further, an economist says.
Mr Stevens said the RBA's target to maintain inflation with a two to three per cent range over the course of the economic cycle was the best system to keep prices down.
He said Australia's price pressure problems now were not as bad as in the 1970s.
"Even with the recent surge in consumer prices taking the inflation rate to a bit over four per cent, things are not like there were in the 1970s," Mr Stevens told a University of Sydney alumni dinner.
Mr Stevens said inflation could rise to 1970s-type levels if a target band was not obeyed.
"It's easy to say `why not raise the target?'," Mr Stevens said.
"That was the previous thinking of the 1970s. That's how we got 10 per cent (inflation), it's too big a liability."
Between 1970 and 1979 the average rise in the CPI was 10.7 per cent a year, which eroded the value of money by 60 per cent over the period.
JPMorgan chief economist Stephen Walters said the governor's speech indicated rate cuts any time soon were "out of the question".
- - - - -
Read rest of article !
http://au.biz.yahoo.com/080516/2/1qt9c.html |
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By: contratrad
16/05/2008
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Hello AL,
Thanks for You assistance in explaining the overall situation to s step000.
A very concerned ,
contra |
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By: almurrie1@y7mail.com
16/05/2008
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Hi Step,
love your he he!
Did you see in the Courier Mail Friday that Australian banks have made 10.5 billion "profit" from the increase in fees for credit cards and loans! The credit crunch has come directly from the banks themselves not allowing other banks to get away with shifting the cheques around in circles, never turning them into cash. Now they don't trust each other, no one wants to be caught holding uncashed cheques issued by a bank that has gone belly up. So they can't get away with lending on a promise as easily, and by the way where is all this money coming from that is so called being "lent" to the Banks? In a complex round-about from the printing presses owned by the governments of the First World, because all the "corporation cash" is already promised for their own projects. This equals world INFLATION, the same as Robert Mugabe did to buy arms - print money, 1000% inflation! The idiot masses feel richer, but have to pay twice as much for a loaf of bread!!!!
Wait and see if I am right. The credit crunch will be over soon but inflation will become "acceptable" at 6% or more.
In the US the Fed is "auctioning" off bonds in exchange for mortgages, ie turning 25 years of future payments into liquid cash ($835 billion in the last round). So Step you are not quite right about the conclusion you made about the prepaid interest. Australia is part of the world banking system and so is also partaking of this particular pie.
Also the banks get away with holding little cash, by the idea that they are protected by the reserves deposited with the Reserve Bank, but apparently this is no longer a requirement, so the Reserve really holds no reserves, only what the governments allows the mint to print and give to them.
Contra is right on the money only explained it less well.
Sack the RBA board and Glen, and take back control.
Al |
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By: s_step000
16/05/2008
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Hehe
Requote as my prev quote is wrong.
Contra's argument, is that Banks can lend to customers simply by relying on fees and depositors and loan interest repayment which I think is totally wrong.
Here u exclude the biggest variable, that is money market and capital market for raising money for banks. 50% of the fund is obtain this way. This is the reason banks raises rate out of control. |
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By: contratrad
16/05/2008
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Hello AL ,and thanks for Your very informative Posting.
S step000 You are quoting me incorrectly because You are leaving out the fact that I have always said the Banks also obtain Funds from loan Interest Repayments or do You include Loan Interest payments in ' fees'.
Your Quote ---' Contra's argument, is that Banks can lend to customers simply by relying on fees and depositors which I think is totally wrong' .
Anyway, I think AL 's informative Posting has cleared the picture up for You !
A very concerned,
contra |
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By: s_step000
15/05/2008
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"They are about creating money from nothing"
Here, you are implying if the customer of Banks A, say C want to buy a house from me, I did not receive money at all?
they have no real money at all to invest in "money markets".
I did not say they invest in money markets. You said that. Banks raises capital from money markets from investors. That is borrowing. They then lend this money to their customer.
Contra's argument, is that Banks can lend to customers simply by relying on fees and depositors which I think is totally wrong.
I am using the post to show that Banks relay on investors willingness to lend money. When investors are less willing to lend money they raise the lending rate to banks. Banks will then pass on the rate increase to the customers. |
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By: almurrie1@y7mail.com
15/05/2008
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S Step
Credit Unions can only lend their members' deposits. Not so for Banks.
Transparency in Banking, now that's a novel idea. They hide their figures so well that not even other banks trust each other any more. No one knows what they are doing with their creative accounting but I can guarantee that they have no real money at all to invest in "money markets". They are about creating money from nothing. What they do is write a promisary note backed up by their reserves to the effect that they will honour a cheque if it is presented. No cash changes hands at all. This means the numbers go around and around and they charge 9.5% for this privilege for home loans and up to 20% for cards + fees. Again and again. Leverage. So they hold a couple of billion, lend it out up to 11 times, and make more like 90% on it! How else do you get to make 2 billion in 6 months! And in the mean time if any one actually wants that bit of paper turned into real money (which less than 10% ever do), they just slice into the interest payments they are getting, to pay up. And if there ever was a run on the banks you would quickly find that they have no actual cash at all. Technically this makes them bankrupt. Like you would be if you lent money on just a promise to pay. As long as everyone believes you can do this it is fine!! When this fails, (eg in G.B. recently) it is in their interest for governments to just crank up the presses and print money to bail out the bank (or let the Reserve increase the interest rates). The latest from the USA is that the Fed wants to "give" interest to the banks on the reserve funds it holds, so the banks can be more liquid. Fed doesn't do this at the moment so wants the law changed in USA to allow it.
And we wonder about 4% inflation. The government is printing money for all the loans that have been given on a promise. And of course the Reserve knows this very well, and pretends, along with the Government to blame bananas etc, anything but the truth. |
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By: s_step000
15/05/2008
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"It all works like the old Chain Letter System, s step000 -----as the Retail Banks receive Interest Payments in , they have those Funds available to Lend out again. "
Hmm does not make sense. From previous post, Banks has an income of 100 billion from fees, interest, and termination fees. NOW, Banks need to loan 350 billion out (buying 350 billion asset for customers).
I dont understand how if u only have 100 billion you can lent 350 billion to ur customers without borrowing from others. |
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By: contratrad
15/05/2008
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Hello s step000,
It all works like the old Chain Letter System, s step000 -----as the Retail Banks receive Interest Payments in , they have those Funds available to Lend out again.
A very concerned ,
contra |
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