By: mentawaisurf
3/03/2009
5:10 pm Yahoo! Profile:
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Lasty, the RBA has repeatedly shown that they have absolutely no idea what they are doing (as with all central banks based on their flawed economic assumptions).
Remember it was just 7 months ago that they were scaring us about the 'Inflation Genie' and raising rates!
As always, the RBA, and our economic leaders, are so far behind the curve that they have no way of seeing what is coming. We can expect them to stay true to their script and follow the economy and housing market down over coming months and years.
In the meantime, they are merely trying to drive our economy the same way as driving a car by looking in the rear vision mirror... |
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By: ecchi.gaijin
3/03/2009
5:07 pm Yahoo! Profile:
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"When deleveraging is in full swing, even zero interest rates wont be enough to revive the economy."
Bull, one key factor that you need to keep in mind is that for the subprime component of the USA household debt there was an automatic trigger of force refinancing after X number of years, and secondly unemployment. The key trigger here will be unemployment. |
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By: bullnowbear
3/03/2009
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Lasty, I was making fun of the RBA and being sarcastic. I was referring to their good for nothing policy.
Do you seriously think the petrol price fluctuations is a sign of inflation and warrants rate rises?.
Petrol dropped by more than 40% and production was drastically cut to maintain the prices. Besides oil prices have been hovering around 40$ a baralel for quite some time.
More to the point read Steve Keens latest blog http://www.debtdeflation.com/blogs/2009/03/03/the- rba-doesnt-get-it/
Our aggregate debt level is lower than Americas mainly because we dont have the same level of financial sector debt but our households are even more indebted in the aggregate than are Americans, and the rate of growth of household debt was substantially higher here in the last 20 years than it was in the USA. We will enter a crisis when our level of deleveraging approaches those already being seen in the USA.
When deleveraging is in full swing, even zero interest rates wont be enough to revive the economy. I expect the RBA to be forced by economic reality to renew its interest rate reduction campaign within the next few months.
Reality is so much better a guide to economic policy than neoclassical economic theory |
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By: lasty49
3/03/2009
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"Only someone who has the wrong intentions would encourage the masses to borrow and fix during uncertain times."
Isnt employment uncertain at anytime?
Even though I believe in debt ( which runs a cold shiver down your back, I Know) You need to act responsibly with it.
Nearing the end of the cycle which we are about to embark on, debt should be locked in a low interest rates for as long as possible.
The amount of stimulation this govt has thrown at us would make any sad girl happy for years.
That means if we are pushing lower lows we will snap back very fast.Elastication theory.
So lock me in Eddy !! |
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By: lasty49
3/03/2009
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"Not at all. I seriously believed RBA would not cut any interest rates given the talk about petrol price inflation."
Crikey, I thought you mispelt deflation therefore a second.
According to your new world everything will be at half price so why worry about petrol inflation? |
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By: ecchi.gaijin
3/03/2009
4:43 pm Yahoo! Profile:
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Menta, restraighten your panties. I wasn't trying to deconstruct anything, just merely pointing out facts. Economic theory does in fact talk about price being determined by where supply meets demand and elasticity refers to the relative strengths of supply and demand in regards to drivers of that price. These are basic principles of economics that you would know if you had any knowledge in the field.
And again I repeat, you contradicted yourself by saying in the first paragraph that S&D is a flawed theory and in the last paragraph referred to it to prove your point. |
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By: lasty49
3/03/2009
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The RBA have fired a warning shot over the bow.
If they think Australia is in dire straights they act before hand not after the fact like the FED or BOE.
Australia according to Glen Stevens is in a different boat than other nations.
I suggest you listen to what he says because he is the trigger man.
"The RBA noted that the Federal Government's stimulus packages - totalling more than $52 billion - are yet to work their way through the economy, while interest rates are already about as low as they have ever been.
''Market and mortgage rates are at very low levels by historical standards and business loan rates are below recent averages, reducing debt-servicing burdens considerably,'' Mr Stevens said.
''Together with the substantial fiscal initiatives, the cumulative decline in interest rates will provide significant support to domestic demand over the period ahead,'' he said" |
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By: mentawaisurf
3/03/2009
4:21 pm Yahoo! Profile:
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horny foreigner, like lasty, in trying to deconstruct and criticise my argument you totally miss the point. Economic theory of S&D does not even consider the primary driving force in setting price during investment manias - that of increasing demand due to increasing prices (expressed as an appetite for risk/debt) or the implications of a decline as the resultant debt bubble unwinds. That is why it is a flawed theory for describing investment vehicles (which real estate becomes during a boom).
Also, with the RBA putting rates on hold that merely means we have even bigger rate cuts to come as they continue to follow the economy, and our housing market, on its super cycle decline (just like we are experiencing around the world). |
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By: bullnowbear
3/03/2009
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Well the RBA left rates on hold against many expectations.
Damn I hear from the Keen clan.
Not at all. I seriously believed RBA would not cut any interest rates given the talk about petrol price inflation.
No one not even a spaceship from Marks can save us. Expect export revenues to plunge, profits to to plunge, job losses to accelerate and No one should be getting in debt during these uncertain times. Get out of debt! Only someone who has the wrong intentions would encourage the masses to borrow and fix during uncertain times. |
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By: lasty49
3/03/2009
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"It's largely the young & naive (first home buyers) that are currently entering our housing market - enticed by the government FHB grant."
As opposed to what? Renting, housing commission, living in a tent or perhaps a local council subsidised park bench.
"Who will take responsibility when so many of our young people fall victim to the unfolding asset deflation and loose everything they have?"
Obviously the RBA wont because they are more concerned on the inflation side by todays action otherwise they would have cut.
This is Australia not America ! |
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By: ecchi.gaijin
3/03/2009
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Also, your last paragraph seems to contradict your initial paragraph.
"This is based on the flawed assumption that supply and demand (economic theory) sets all prices"
"forced increases in existing housing supply coupled with growing demand destruction has not been factored by the many pundits" |
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By: ecchi.gaijin
3/03/2009
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"The housing bulls still fall back on buoyant demand for real estate with supply shortages as reasons for house prices to maintain their value. This is based on the flawed assumption that supply and demand (economic theory) sets all prices. This is true for goods & services (ie. demand falls as prices rise) but not for financial assets."
Menta, the degree of elasticity of supply and demand does not contradict the basic principle of price being determined by where supply and demand meet. |
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By: lasty49
3/03/2009
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Well the RBA left rates on hold against many expectations.
Damn I hear from the Keen clan.
What this does of course is make people stop and think.Is this the end of the interest cut cycle.Should I now borrow and fix rates?
One thing it does do is restore a bit of confidence.
Our currency's higher. Sharemarket off the lows.
Also it sends a signal to the business community that we arent out of the woods just yet but things arent that bad.
That may spill over to the employment sector and those looking to hire staff but were afraid to may now act.
Of course in the US a completely different story and they have a long way to go before recovery. |
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By: mentawaisurf
3/03/2009
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Yes Bull, it's certainly the trend.
It's largely the young & naive (first home buyers) that are currently entering our housing market - enticed by the government FHB grant.
Our 'leaders' are encouraging our young to take on a heavy debt burden in an environment that increasingly confirms that overburdened debtors will be severely punished. Who will take responsibility when so many of our young people fall victim to the unfolding asset deflation and loose everything they have? |
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By: bullnowbear
3/03/2009
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"Regarding a members comment on inflation and to buy now and lock it in"
Indeed, there is a massive battle going on for the hearts, minds and wallets of consumers. But they are fighting a losing battle. The 42 Bill stimulous package will be followed by others. In the US Obama is similarly pump priming.All these efforts pale into significance ahead of debt de-leveraging by consumers.
No matter how hard Govts and their media lackeys employ spin urging people to spend and borrow, when their jobs are in jeopardy (and now being lost) they will not be chasing new debt. These articles here tell the tale;
http://news.google.com.au/news?pz=1&ned=au&hl=en&q =jobs+australia
In fact, it looks increasingly certain that in addition to shunning new debt, households worldwide are going to be reducing existing debt for years to come. This is evolving into a secular trend.
http://news.smh.com.au/breaking-news-business/auss ies-reducing-debt-on-economic-fears-20090301-8lbd. html
Commsec economist Savanth Sebastian said clearing debt was attractive for Australians in the current economic climate.
At the moment, consumers are probably looking at the global economy, realising it is weak and they have big concerns about employment, Mr Sebastian said.
They are really shunning away from debt in this environment.
They are trying to ensure their households budgets are in order.
The average debt on a credit card was $3,162 in December 2008, with plastic debt increasing at three per cent yearly, the slowest rate on record.-Commsec economist Savanth Sebastian .
(Why doesnt this guy get a tv spot instead of that idiot Craig James?) |
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By: lasty49
3/03/2009
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Love your work forrest.
Enjoy those waves and watch out for the Noah's ! |
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By: forrestwicks
3/03/2009
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Lasty the box o chocolates got scoffed long ago i'm still on the run hey how about shrimply delicious, but the only secure investments for me havebeen the properties that are free an clear like a caravan park there great when people can't afford the current rents regardless where in the world they are located, also if you find a trust worthy partner in china that is sometimes difficult
hey Lasty i'm an ol dude just tryin to catch a few waves here in mereweather NSW great place
Gave up runnin an chocolates |
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By: lasty49
3/03/2009
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forrest,
"the asx is falling and the whole world is tanking he's still thinkin property values are still going up,does he look at the asx from 1 yr ago keep the dream alive!"
If you really want to know Im in a short selling international fund and just about to pull it back onshore.
What you got for me forrest? Any wisdom there in your box of chocolates? |
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By: forrestwicks
3/03/2009
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Hey Lasty, smart man, a home is a place to live not a retirement
yur right again
good advice |
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By: lasty49
3/03/2009
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forrest,
"Sir Lasty are you a realestate investor? ie. residential,commercial."
Dont touch the stuff mate.
Last time I bought property was back in 1984.
I had a tennant in it.
Pain in the ar$se. Never again.
Property trusts are hoaxes.
There you go.. I dont have any position except my residence to influence my view.
However if the market does fall 40pct I will be a buyer not a seller.
There are so many factors to get it to a 40% decline its highly unlikely.
The risk I see is which is starting to brew is inflation. |
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By: forrestwicks
3/03/2009
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| Menta lasty must have a lot to lose that's why he's so in denial when the asx is falling and the whole world is tanking he's still thinkin property values are still going up,does he look at the asx from 1 yr ago keep the dream alive! |
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By: mentawaisurf
3/03/2009
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Lasty, the false assumptions made by our 'experts' is precisely the reason they got us all into this mess in the first place!
The tide has turned in the collective social mood of the herd. We now have a growing reluctance to take on more debt while banks must hoard cash to try and survive the blow-out from the excesses of the previous decade of unfettered credit expansion.
The RBA will follow the world and cut cash rates to 0% by late next year (ie. mortgage interest rates of 2-3%) but home prices will continue to fall. Why would anyone pay even 2% on an asset that continues to fall in value?
This is all part of the deflationary story now unfolding.
Let's not forget, we are still in the early stages of decline so we can expect unemployment to continue to accelerate. This global story has just begun. The next chapter is called 'Australia'. |
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By: forrestwicks
3/03/2009
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| Sir Lasty are you a realestate investor? ie. residential,commercial ? |
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By: lasty49
3/03/2009
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"Australia's demand driven financial mania, fuelled by easy and cheap credit, was the leading force in creating our housing market bubble."
What do you call interest rates now? High?
The problem with your assumption is that you are expecting a financial tsunami to occur on the scale of the US.
To get the result of large housing decline, unemployment has to at least triple from these levels.
Then you have to assume that most are mortgage holders. |
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By: forrestwicks
3/03/2009
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| Right on Dude! |
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