By: ang101000
20/11/2009
11:25 am Yahoo! Profile:
ang101000 Did this message offend you?
Sign in to report abuse |
Reply to this message |
Menta,
The whole world is betting on inflation; the political - economic strategy was and is the same to invest in the deflated assets and wait till prices are inflated before selling it all off, again (the never ending cycle, of course...) |
|
By: ang101000
20/11/2009
10:55 am Yahoo! Profile:
ang101000 Did this message offend you?
Sign in to report abuse |
Reply to this message |
Mate,
I agree with your inflation outlook (and have been for a long time) but admire (and sometimes are frustrated with) how eloquently Menta can express his views on matters of economy and investment.
Lasty, you are more pragmatic therefore more successful in this very dynamic and highly uncertain investment climate.
PS. Keep taking that Viagra it seems to be working for you and just use that mattress for its original purpose :-)
(For those who have a wild imagination, I am not flirting with anybody, quite happy and secure in my life and relationship.) |
|
By: mentawaisurf
20/11/2009
10:45 am Yahoo! Profile:
mentawaisurf Did this message offend you?
Sign in to report abuse |
Reply to this message |
That's right Ang. Governments, central banks and financial institutions have been betting heavily on a strong economic recovery to keep the music playing. The only problem is if we do experience deflation and the bursting of the asset bubbles that they have tried so desparately to re-inflate, then the wealth destruction will be so much worse than if the did nothing and let them burst last year.
Also, there is a limit to how much private debt governments will be 'allowed' to transfer into public debt (expect mass protests during the next more severe phase of crises). Currently people maintain faith in their gamble. But if it all goes pear-shaped we can be sure that people's faith will quickly turn to shock and then anger (we had just a taste of that last year). |
|
By: lasty49
20/11/2009
10:38 am Yahoo! Profile:
lasty49 Did this message offend you?
Sign in to report abuse |
Reply to this message |
ang,
Unfortunately in the investment world we cant pretend.
Menta's deflationary theory has not worked in this country for 12 months. We still have inflation and therefore his returns reflect his anticipation.
One year he maybe right but currently he is bucking a trend.He has been trying to pre-empt the end of this trend for the past 12 months.
His money maybe "safe" in a bank but his risk management/methodology is highly questionable.
As for a PIN and a Keycard under my mattress.. No but then I dont charge myself fees or arent worried about skimming machines ;-) |
|
By: ang101000
20/11/2009
10:18 am Yahoo! Profile:
ang101000 Did this message offend you?
Sign in to report abuse |
Reply to this message |
Lasty,
does your mattress comes with a keycard and pin number?
I'll take one of those, please :) |
|
By: ang101000
20/11/2009
10:12 am Yahoo! Profile:
ang101000 Did this message offend you?
Sign in to report abuse |
Reply to this message |
Lasty,
you are pretending to be silly; it is a condition for 'The Menta method of safe investment' that there is NO INFLATION, quite the opposite there is DEFLATION (of all asset classes). The method than holds true.
It is whole new argument indeed if the current economic climate is inflationary or deflationary. |
|
By: lasty49
20/11/2009
9:52 am Yahoo! Profile:
lasty49 Did this message offend you?
Sign in to report abuse |
Reply to this message |
ang,
"'The Menta method of safe investment and return'
You have to admit it; it does work and it is highly predictable."
After tax and taking inflation into account he would be 0.7% infront.
I would question the word "investment" and also "return"
Under the mattress is less of a headache ;-) |
|
By: ang101000
20/11/2009
9:28 am Yahoo! Profile:
ang101000 Did this message offend you?
Sign in to report abuse |
Reply to this message |
Lasty,
'I could have stuck my money in cash and earned a
WHOPPING 4% too ;-)'
That method of investing should be called 'The Menta method of safe investment and return'.
You have to admit it; it does work and it is highly predictable. |
|
By: lasty49
20/11/2009
9:05 am Yahoo! Profile:
lasty49 Did this message offend you?
Sign in to report abuse |
Reply to this message |
ang,
Yup I could have but hey Im not complaining.
I could have stuck my money in cash and earned a
WHOPPING 4% too ;-) |
|
By: ang101000
20/11/2009
8:33 am Yahoo! Profile:
ang101000 Did this message offend you?
Sign in to report abuse |
Reply to this message |
Lasty,
if you borrowed in US and invest in Oz share market, you have made (potentially more or less) 128%. In contrast if you just invested (for the same period) in Oz in AUD you made (potentially) about 56%.
No wonder money is flowing in....let's hope the market stays rational. |
|
By: ang101000
20/11/2009
8:27 am Yahoo! Profile:
ang101000 Did this message offend you?
Sign in to report abuse |
Reply to this message |
Mate,
what did you expect to happen after the negative US economic figures came in? Housing bad, industry bad, employment (should it be unemployment?) bad and the list goes on and on....Market is rational as much as it correlates to GDP (which it does), so of course the expectations are still fragile as is the recovery story... |
|
By: jaymarcel
20/11/2009
8:26 am Yahoo! Profile:
jaymarcel Did this message offend you?
Sign in to report abuse |
Reply to this message |
| The worst case outcome sounds like the answer is civil unrest, I think I may move to the country & grow my own food & harness my own water supply. |
|
By: lasty49
20/11/2009
8:23 am Yahoo! Profile:
lasty49 Did this message offend you?
Sign in to report abuse |
Reply to this message |
"Banks need inflation in order to keep their credit-machine running and profits flowing."
Not in Australia they dont.
Despite "fee reductions" they still charge more than most gloabl banks.
Also all the major Australian Banks own fund management arms attached to that is superannuation.
How many times have you heard complaints about fee gouging by the super funds?
Guess where those fees are going. |
|
By: lasty49
20/11/2009
8:23 am Yahoo! Profile:
lasty49 Did this message offend you?
Sign in to report abuse |
Reply to this message |
"Banks need inflation in order to keep their credit-machine running and profits flowing."
Not in Australia they dont.
Despite "fee reductions" they still charge more than most gloabl banks.
Also all the major Australian Banks own fund management arms attached to that is superannuation.
How many times have you heard complaints about fee gouging by the super funds?
Guess where those fees are going. |
|
By: lasty49
20/11/2009
8:18 am Yahoo! Profile:
lasty49 Did this message offend you?
Sign in to report abuse |
Reply to this message |
Hi Ang,
Haha No I didnt borrow USD. Its too much palava.
However going long AUD/USD is more or less the same thing ;-).
Another profit taking session last night it seems. |
|
By: ang101000
20/11/2009
7:48 am Yahoo! Profile:
ang101000 Did this message offend you?
Sign in to report abuse |
Reply to this message |
Govt and banks have made their decisions; spend more and wait for the capital assets and markets to re-inflate.
Perhaps Menta is correct; it will be a long wait... |
|
By: rstuarts2000
20/11/2009
7:37 am Yahoo! Profile:
rstuarts2000 Did this message offend you?
Sign in to report abuse |
Reply to this message |
So prior to the gfc this credit machine was helped nicely along by increasing household debt. But isn't it now run by increasing government debt (and there still appears to be plenty of house hold debt being created also)?
As in my one of my posts, if the debt to gdp is so much higher now than in the 1930's and given the turmoil deflation caused back then , I can't see how the global economy will be allowed to deflate.
The living standard Australians and other people in first world countries are now so used to will be very hard to withdraw. Surely the result of mass global deflation would see governments get thrown and the current economic system rejected worldwide; in other words chaos.
This is why globally there is such a move by governments becoming debtors for stimulus. What if the solution to the problem is to get the whole world into so much debt no-one can repay, locking up system and forcing reform to a improved version, one that can deal with sustainable growth (i.e. considers environmental limits)? |
|
By: jaymarcel
20/11/2009
7:32 am Yahoo! Profile:
jaymarcel Did this message offend you?
Sign in to report abuse |
Reply to this message |
So Menta you think the current house price surge is the final run for real estate?
At worst surely the prices will just stay level, the only reason prices should go down is if job losses rise drastically which is not happening. |
|
By: mentawaisurf
19/11/2009
4:55 pm Yahoo! Profile:
mentawaisurf Did this message offend you?
Sign in to report abuse |
Reply to this message |
Banks need inflation in order to keep their credit-machine running and profits flowing. Our asset bubbles (especially Australian housing) needs credit expansion to keep them from deflating. Only the problem now is that we are already too indebted and can no longer take on more debt to keep the game going (as shown in falling bank credit since the FHOB phased out and falling consumer credit since 2008). The music has stopped and soon so too will the dancing.
Credit expansion fueled our housing bubble but the unfolding credit contraction will deflate the bubble. The resulting deflation will hit debtors hard as it makes their debts more expensive in real terms while their assets fall in value (a double whammy). So the current debt deflation will lead to asset deflation and further debt deleveraging and so the cycle goes (a classic deflationary spiral that we have not experienced since the 1930s). |
|
By: ang101000
19/11/2009
9:43 am Yahoo! Profile:
ang101000 Did this message offend you?
Sign in to report abuse |
Reply to this message |
Hi Lasty,
speaking of debts; are you one of those people who borrowed USD to invest in AUD in the market?
I bet, you are laughing now :) You smart ...:)
O an other note, please visit Billy's 'Post-Autistic Economics: The New System' , I have left a message for you there. |
|
By: lasty49
19/11/2009
9:20 am Yahoo! Profile:
lasty49 Did this message offend you?
Sign in to report abuse |
Reply to this message |
Debts may have increased from a decade ago but so have wages and income tax has been reduced.
So what about debt to serviceability?
Also there are those who string out their mortgages by only repaying interest and using their Super to lump sum pay it off.
How can Keen dismiss Super as not part of the household savings? |
|
By: rstuarts2000
18/11/2009
7:43 pm Yahoo! Profile:
rstuarts2000 Did this message offend you?
Sign in to report abuse |
Reply to this message |
Is up 5% from 10 years ago unsustainable, and if not why?
I agree, all debt must be either repaid or defaulted. It would appear that in the majority of cases in Australia the debt is being repaid. I will check out the deflation thread |
|
By: mentawaisurf
18/11/2009
1:57 pm Yahoo! Profile:
mentawaisurf Did this message offend you?
Sign in to report abuse |
Reply to this message |
rstuarts, the proportion of Australian households currently mortgaged has increased to 35%, up from around 30% a decade ago, a new report from securities firm CommSec has revealed. The level of both mortgage and consumer debt in Australia is at record high levels.
All debt must be either repaid or defaulted. The debt deleveraging and asset deflation in Australia is likely to commence during 2010 and last for several years to follow.
See my post on the deflation thread for more. |
|
By: jaymarcel
18/11/2009
9:30 am Yahoo! Profile:
jaymarcel Did this message offend you?
Sign in to report abuse |
Reply to this message |
Hi rstuarts, is your question aimed at menta ;)
I personally don't see deflation happening, we are starting to see too many positves coming from countries other than the USA & the UK, these two countries alone will not cause international deflation.
Asia & the rest of europe is in recovery mode & Australia is continuing to be the lucky country.
Did you see much spread from the J@pan situation, not really, the cash just shifted to other more financially positive countries. |
|
By: rstuarts2000
17/11/2009
10:05 pm Yahoo! Profile:
rstuarts2000 Did this message offend you?
Sign in to report abuse |
Reply to this message |
| What if the systemic debt has become so large it is now to big to let fail? The process of deflation during the 1930's was painful enough, is deflation an option now? |
|
