Potential Big GFC Discussion Thread

[trippytaka]

Originally Posted by AMGC63

BINGO!!!!!!! Give the man a prize.


The highlighted bit is what ive been saying all along, talk up the doom and gloom and its far more likely to happen (self forfilling) than if we promote as positive an environment as we can.
Consumer confidence and consumer spending (retail, housing etc) here holds the key to OUR economic situation and outlook far more than what mess the US is in....

OUR situation and climate is totally DIFFERENT to the US's....

While I agree in part, I don't think the doom and gloom talk has caused the consumer confidence levels to drop. Yes, the panic selling in the market, but not on the street. It's been with us too long - retail and housing has been slowing progressively for some time now.

Low consumer confidence has been caused, IMO, by the fact that Australians are leveraged to the eyeballs with personal debt and have realise they need to pay it off. They see the rest of the world in trouble and think - "holy bjsus, we're really up to the eyeballs here. We better pay some of that down, just in case."

This retail slow down has been happening for a while... the housing market in Perth turned around a few years ago, Gold Coast, Central Coast NSW etc all started a few years ago.

There have been cracks already appearing. I think that the recent events have just amplified it, more than casued it.

[AMGC63]

Originally Posted by trippytaka

While I agree in part, I don't think the doom and gloom talk has caused the consumer confidence levels to drop. Yes, the panic selling in the market, but not on the street. It's been with us too long - retail and housing has been slowing progressively for some time now.

Low consumer confidence has been caused, IMO, by the fact that Australians are leveraged to the eyeballs with personal debt and have realise they need to pay it off. They see the rest of the world in trouble and think - "holy bjsus, we're really up to the eyeballs here. We better pay some of that down, just in case."

This retail slow down has been happening for a while... the housing market in Perth turned around a few years ago, Gold Coast, Central Coast NSW etc all started a few years ago.

There have been cracks already appearing. I think that the recent events have just amplified it, more than casued it.

Unfortunately i have less faith in the intelligence of the average Australian to tell the difference, you only have to look at election results to see that, elections are popularity contests, not people voting for REAL policy hence why our politicians do nice things near elections and nasty things just after.
No Govt will ever be totally effective until electorates take more interest in policy and politics and the broader well being of the country rather than their own self interests.

[BENT_8]

Originally Posted by trippytaka

While I agree in part, I don't think the doom and gloom talk has caused the consumer confidence levels to drop. Yes, the panic selling in the market, but not on the street. It's been with us too long - retail and housing has been slowing progressively for some time now.

Low consumer confidence has been caused, IMO, by the fact that Australians are leveraged to the eyeballs with personal debt and have realise they need to pay it off. They see the rest of the world in trouble and think - "holy bjsus, we're really up to the eyeballs here. We better pay some of that down, just in case."

This retail slow down has been happening for a while... the housing market in Perth turned around a few years ago, Gold Coast, Central Coast NSW etc all started a few years ago.

There have been cracks already appearing. I think that the recent events have just amplified it, more than casued it.

Sot on!

I've been waiting for people to jump on the old 'self fulfilling prophecy' angle. Now things are turning bad as many here have predicted, the optimists, unable to accept any responsibility for where we are at, are trying to shift blame away from themselves.
Im not buying it and Trippy is spot on.
The economy is stuffed and greed and cheap credit have fuelled it.

[BENT_8]

Originally Posted by trippytaka

http://www.nytimes.com/2011/08/11/bu...imes&seid=auto

The last paragraph is of particular interest.
I made a post in the house price thread about a discussion i had with a real estate agent friend about housing affordability.

To cut a long story short she told me housing wouldnt crash as such as the banks couldnt afford to let it happen.
People will lose their homes, of this she had no doubt as many have over commited, but she predicted the financial institutions would look to rent to own the foreclosed properties to avoid flooding the market and forcing values down.

[DJR-351]

Christ!! some of you guys should be on suicide watch....

[z80]

Originally Posted by geckoGT

That is a very scary question for any Australian, I am sure the AUD being worth $2US is not a good prospect.

I don't have any problem buying 2 american dollars for one aussie dollar.

Ask me if i was happy to pay $700 aussie dollars to take a family of four to Disneyland in 2001 for ONE day, (without food and drinks)?

We were 0.48c then...

Why shouldn't their inferior currency ( which has enabled them to buy goods at very distorted cheap prices for years) be worth less than ours?

[trippytaka]

Originally Posted by BENT_8

The last paragraph is of particular interest.
I made a post in the house price thread about a discussion i had with a real estate agent friend about housing affordability.

To cut a long story short she told me housing wouldnt crash as such as the banks couldnt afford to let it happen.
People will lose their homes, of this she had no doubt as many have over commited, but she predicted the financial institutions would look to rent to own the foreclosed properties to avoid flooding the market and forcing values down.

It's a very interesting point. One that, I have to admit, I haven't even considered until now.

One thing to note, however, is that if this happened, then there would be a flood of rentals on the market and this would force prices of rent down. My assumption would be then that the investors who bought in higher and need high rental yield would pull the pin.

Opinions?

[trippytaka]

Originally Posted by DJR-351

Christ!! some of you guys should be on suicide watch....

Haha!

[SB076]

I am not even going to try to predict the markets anymore as I was out by a long shot earlier in this thread.

However I would like to point out that what ever you beleive may happen you do realise you can make a substantional amount of money if you are proven to be correct?

For instance if you genuinely beleive the market will crash and burn, then you do have the ability to short sell - likewise if you beleive the market will recover and everything is rosy than you have the ability to invest in the market and reap the rewards in a few years time. I wonder if anyone has done either?

My thoughts are that there are issues with the local economy, this is based on my personal experience. I have recevied an increase no. of liquidation auction notices - plus we are noticing more people coming off the street asking for work (typically we dont get a lot of that) Having said that I have no doubt some businesses are doing well in the current enviroment - but we should recognise others that are not (this no doubt has an impact on some Australian families and we should recognise that)

So its not all doom and gloom but its not all rosy either - for those that have it good - thats great news I hope it continues for those who are struggling I hope things turn around

[FTe342]

Originally Posted by trippytaka

It's a very interesting point. One that, I have to admit, I haven't even considered until now.

One thing to note, however, is that if this happened, then there would be a flood of rentals on the market and this would force prices of rent down. My assumption would be then that the investors who bought in higher and need high rental yield would pull the pin.

Opinions?

Unless Bent_8's real estate friend used to work in the banks hierarchy, she wouldn't have a clue what the banks might do. And depending on the total economic circumstances at the time, if when that did happen, their approach might involve a hundred different scenarios.

If you know how negative gearing works, then a decrease in the rental yield means a bigger negative cashflow, which means that the ATO will be picking up some of the shortfall. How much depends on the tax position of the investor, who even has the option of varying the amount of tax they pay from one pay top the next - no need to wait until the end of the financial year. So it would have to be a significant rent drop to affect a landlord.

And consider this, if mortgagors have been forced out of their homes by the banks, where are they going to live? They are now renters, keeping the demand for rental properties high - maybe even renting their own home off the bank - which when you think about it is not much different to paying the mortgage.

[CJR09]

Originally Posted by FTe342

And consider this, if mortgagors have been forced out of their homes by the banks, where are they going to live? They are now renters, keeping the demand for rental properties high - maybe even renting their own home off the bank - which when you think about it is not much different to paying the mortgage.

Heard of communal living much? Friends/family? If you cant afford mortgage then you cant afford rent aye cos as you say there aint much difference

[mr smith]

Originally Posted by FTe342

And consider this, if mortgagors have been forced out of their homes by the banks, where are they going to live? They are now renters, keeping the demand for rental properties high - maybe even renting their own home off the bank - which when you think about it is not much different to paying the mortgage.

As posted, people will share. If they are broke how will they pay rent and how long will investors put up with broke tennants? I belive if house prices fall, rents will as well. I've allready seen houses on the market for a long time now offered as rentals. These owners have two options, drop the price or add to the rental stock, either senario = down.

[Riksta]

Originally Posted by geckoGT

That is a very scary question for any Australian, I am sure the AUD being worth $2US is not a good prospect.

Would be an awesome time for online shopping! I know my credit card would get a hiding if it ever went that high!

[FTe342]

Originally Posted by CJR09

Heard of communal living much? Friends/family? If you cant afford mortgage then you cant afford rent aye cos as you say there aint much difference

Depends on how much the mtg payments were and how much the rent is. Could be hundreds $'s difference. The people who are mostly to default are those with high repayments and maybe have dropped back to one income. Again, hundreds of scenarios could be the cause and outcome.

If people have a resonable level of equity the banks aren't going to take possession straight up, especially if they have a heap of defaulters. The banks aren't in business to sell houses.

A lot of people may be forced to downsize, from house to unit for example. As you say, some would share/rely on family, but not everyone is going to end up on the street.

This is all speculation IMO, I think Australia won't be too badly affected in the total scheme of things. The carbon tax is just as likely to cause major upheaval for some families as the world economy

[BENT_8]

Originally Posted by FTe342

Unless Bent_8's real estate friend used to work in the banks hierarchy, she wouldn't have a clue what the banks might do. And depending on the total economic circumstances at the time, if when that did happen, their approach might involve a hundred different scenarios.

No not that i know of, and she may well be way off the mark, but what she said would eventuate is being considered in the US.
I would suggest it is a logical fix to a serious problem.

She believed people would be offered lifetime leases of fixed payments to live in the property as if their own.

Well see what happens hey...

[BA GT-HO]

Dow regains 3.9% overnight, S&P 4.6%, Nasdaq 4.7%.

Really is all over the place, my head hurts.

[trippytaka]

Originally Posted by BA GT-HO

Dow regains 3.9% overnight, S&P 4.6%, Nasdaq 4.7%.

Really is all over the place, my head hurts.

Agreed. But at the end of the day I am stoked that the market seems to have bounced back, for the mean time. It goves a bit of breathing space for people to assess and get advice etc. If nothing else I guess it's a nice wake up call to everyone.

By the way, is it true that since Super was made compulsary the average return has worked out to be 3.8%? I swear I saw that the other night on 7:30 report special on super. Now, if that's true, doesn't it meant hat some people would have been better off in a high-interest savings account?

Again: Spelling. Sorry!

[trippytaka]

Interesting! I think it's a good thing to get rid of betting on failure.

Europe cracks down on short-selling, rumours
August 12, 2011 - 9:16AM

France, Italy, Spain and Belgium will ban the short-selling of stocks from Friday, European market regulator ESMA said on Thursday.

The European Securities and Markets Authority also said it will crack down on market participants who spread rumours and false or misleading news.

The regulator said the EU's Market Abuse Directive prohibits the dissemination of information which gives misleading signals about financial instruments and that European authorities will take a firm stance against any abuse.
Advertisement: Story continues below

"ESMA will support national authorities to act swiftly against any such behaviour which is clearly punishable," ESMA said.

It added that while short-selling can be a valid trading strategy, it is clearly abusive when used in combination with spreading false market rumours.

The announcement comes after European bank shares have been battered this week, in a sell-off partly sparked by a series of rumours about the solidity of banks and the credit rating of sovereign debt.

French market regulator AMF said it would ban short-selling of financial shares for a 15-day period effective immediately.

The shares include major banks BNP Paribas, Societe Generale, Credit Agricole and Natixis, and leading insurer AXA.

Other shares affected by the ban are those of April Group, CIC, CNP Assurances, Euler Hermes, Paris Re and Scor.

Belgium and Spain also announced bans short-selling.

ESMA said the four countries that have decided to impose or extend existing short-selling bans and have done so to achieve a regulatory level playing field, given the close inter-linkage between some EU markets.

"These measures have been aligned as far as possible in the absence of a common EU legal framework in the area of short-selling and given the very different national legal bases on which such measures can be taken," ESMA said.

Reuters

Read more: http://www.smh.com.au/business/world...#ixzz1UlhIetry

[mcnews]

Wonder how many billions the blokes that masterminded this little charade made out of their games this time around...

[MAD]

http://www.heraldsun.com.au/business...-1226113514356

THE number of companies placed in administration in June jumped more than 25 per cent, accounting firm Taylor Woodings says.

And Victoria was among the hardest hit states, with the number of companies that collapsed surging 35 per cent.

Taylor Woodings said the national figure was expected to increase in coming months.

In June, 1027 companies were put in administration, up 25.7 per cent on the number in May, and 21.1 per cent higher than in June last year.

It was the second-highest monthly total on record, behind March 2009 when the financial crisis was at its nadir.

Total external administrations during 2010-11 were 5.9 per cent higher than a year earlier, and just 1.8 per cent lower than in 2008-09, Taylor Woodings said.

The findings are based on figures provided by the Australian Securities and Investments Commission.

Taylor Woodings analysts attributed the rise to a difficult trading environment characterised by a lack of liquidity in debt and equity markets, high interest rates, and continued enforcement activity by the tax office.

They said there remained a "range of pressures on SMEs (small and medium-sized enterprises) and company profits and we predict there will likely be an increase in insolvencies in the months ahead".

Company collapses were up 33.1 per cent in NSW compared with May, but improved slightly in Western Australia.

Would be interesting to see the break down of industries that these companies are in.

[flappist]

Originally Posted by MAD

http://www.heraldsun.com.au/business...-1226113514356



Would be interesting to see the break down of industries that these companies are in.

Up here they are all over the place with the highest percentage being companies who derived income directly or indirectly from international tourists.

High dollar means no backpackers and together with the floods and cyclones it has just got too much.
Whales, reef and Fraser are all hurting badly.

Interestingly it is the ATO rather than the banks who have pushed many over. Some were struggling and had to enter into payment arrangements for various BAS, PAYG & super etc. and when they were still short were being stomped on.
Nett effect, many lost jobs and are now unemployed, creditors just lost their money and the tax will never be paid as the companies were wound up.

Obviously "The goose that laid the golden egg" is not understood in Canberra.

I have friends who have lost everything, millions of dollars, by trying to tough it out rather than just sack everyone and batton the hatches and I have a reasonable 5 digit bad debt ledger.

But it will turn around like it has every other time.

[GasoLane]

Originally Posted by flappist

High dollar means no backpackers and together with the floods and cyclones it has just got too much.
Whales, reef and Fraser are all hurting badly.

I'll be up there doing my bit for the Hervy Bay economy again in Oct!!

Originally Posted by flappist

But it will turn around like it has every other time.

Trust you to go against the grain again. Like most on here you're supposed to be running around in circles saying the sky is falling...or about to

[flappist]

Originally Posted by GasOLane

I'll be up there doing my bit for the Hervy Bay economy again in Oct!!

Trust you to go against the grain again. Like most on here you're supposed to be running around in circles saying the sky is falling...or about to

The beer is chilling.....

[trippytaka]

What is going on in Vic? I understand that QLD and would be hurting - natural disasters, tourism... but what's going on in Vic? It's also the state with fast retreating house prices.

[GasoLane]

Maybe some members on here are right. I just got this from a friend in Seppoland

Originally Posted by a friend in America

*U.S.****** **RECESSION*

The recession has hit everybody really hard...

My neighbour got a pre-declined credit card in the mail.

Wives are having sex with their husbands because they can't afford batteries.

CEO's are now playing miniature golf.

Exxon-Mobil laid off 25 Congressmen.

A stripper was killed when her audience showered her with rolls of pennies while she danced.

I saw a Mormon with only one wife.

If the bank returns your check marked "Insufficient Funds," you call them and ask if they meant you or them.

McDonald's is selling the 1/4 ouncer.

Angelina Jolie adopted a child from America.

Parents in Beverly Hills fired their nannies and learned their children's names.

My cousin had an exorcism but couldn't afford to pay for it, and they repossessed her!

A truckload of Americans was caught sneaking into Mexico.

A picture is now only worth 200 words.

When Bill and Hillary travel together, they now have to share a room.

The Treasure Island casino in Las Vegas is now managed by Somali pirates.

And, finally....

I was so depressed last night thinking about the economy, wars, jobs, my savings, Social Security, retirement funds, etc., I called the Suicide Hotline. I got a call centre in Pakistan, and when I told them I was suicidal, they got all excited, and asked if I could drive a truck.

[bingoTE50]

Ha very good ...

[FTE217]

Thank christ a giggle in this thread - oh I forgot I'm consumed by the copy and paste of all things Doom via the fibre hwy. Dam you people I had a laugh for a mo Thanks GasOlane !

[gtfpv]

hey guys guess what . i havent watched the news , this week at all , had social things on besides work . life hasnt changed a bit . what i'm trying to say is whatever has happened in the markets has effected me about as much as a storm on jupiter. havent checked super either .

[FTE217]

Well don't check gtfpv because you'll be whinning for sure LOL......

[Professor Farnsworth]

oh thank god, nothing in our way of life has changed this week - looks like we're set then.

GUYS, WE'RE ALL GOOD NOW.