Potential Big GFC Discussion Thread

[dave289]

US market update below, have a look at some of those attractive fix rates for 15 and 30 years on the right hand side next to the video.



http://money.cnn.com/2011/08/08/mark...york/index.htm

[Lukeyson]

Originally Posted by vztrt

And that has to do with what?

he has a good memory ???

[dave289]

Guess we can expect another 50 billion + or so wiped off our share market today. Will probably go closer to 70 billion. Good luck all

[GTP owner]

Originally Posted by JackoTJK

Ok, so I'm an agricultural mechanic. Last year was the first decent crop after a 10 year drought. In the past 6 months we have sold 5 new headers ($600,000 each) 22 tractors (avg $125,000 each) and assorted goodies like spreaders and augers. Keep in mind we are in a town numbering 7000 in the shire and have 9 people in the entire shop including sparies! Plus the average rainfall is back to being decent so this year looks to be AWESOME and sheep prices are up giving farmers MORE to spend! Factor in that, what, 70% of Australia's income is from Primary Industries including mining, and Asia are our MAIN interest, then tell me when this recession is meant to begin again?

sorry if this is getting too economic, just too much doom and gloom when Ag is up :(

People need to eat, no matter how bad things get. So agriculture is always going to be a necessary business. As is toilet paper. But TVs, magazines, expensive cars and the like are not. So I would be looking at businesses that are based on needs, not wants. ie Buy ag stocks, sell Harvey Norman

[Spudz27]

If things get really bad I am hoping my job is safe. It was last time, I work in a business that is just 2 owners and me, but we supply and manufacture printer consumables, so we might lose a few customers, but at the end of the day every business still running needs to print. My boss however is licking his lips at the moment, he invested in gold contracts and the more the market drops and people invest in gold, the more his contracts become likely to bring him profit. In september when the contracts get sold for every dollar they are above 1700u.s per ounce, he gets $1000 return.

[castellan]

Originally Posted by GasOLane

Please keep religion out of it. It has nothing to do with this thread.

It had to do with foundations and that is the problem with our whole economy and why we are in the position we are heading with fools controlling the show, with the blind leading the blind we have no hope.

[Kryton]

Originally Posted by vztrt

Remember 08 when petrol was at 90cpl?

NO, honestly cant say i do.
Petrol has never been that price (or anywhere near it) hear in Warrnambool since the 90's.

[flappist]

Originally Posted by castellan

It had to do with foundations and that is the problem with our whole economy and why we are in the position we are heading with fools controlling the show, with the blind leading the blind we have no hope.

It does not matter what it has to do with, it violates the AFF T&C.

Please do not do it again.

[trippytaka]

6% loss overnight on Wall Street... not good. Not good at all.

So for those thinking Australia is not exposed, this is a good article explaining how our household debt is linked to these markets. Remember, asset helped cause this in the first place and negative equity is a major reason many people in America have no money to spend.

http://www.smh.com.au/business/when-...808-1ijad.html

Excerpt

It may not be readily obvious, but Australia has a debt problem. Our government finances are sound. It is our personal finances that require attention.

Ever since the mid-'90s, banks increasingly tapped wholesale funding markets offshore to fund the discrepancy between savings and investment.

We have more than $1 trillion borrowed from offshore. Most of that was brought in by our banks. And the bulk of that was invested into Australian real estate, fuelling a real estate boom and healthy rises in bank earnings.

It is in this environment that Bendigo Bank yesterday delivered a 41 per cent lift in earnings, only to have its stock hammered in the mass sell-off, while the Commonwealth Bank is scheduled to report a mammoth $6.9 billion bonanza tomorrow with the other three majors delivering third-quarter trading updates.

Australian banks largely avoided the American real estate meltdown. But all are hugely exposed to Australian real estate, which now is among the world's most expensive.

There are a couple of logical reasons for that.

For, unlike American real estate, our banks have full recourse loans over our houses. In the US, when the property market crashed, if you had a $500,000 mortgage on a house now worth just $250,000, you could hand the keys back and walk away and the bank would wear the loss.

Not so here. In Australia, the bank has the legal right to sue you for the shortfall and bankrupt you if you can't cough up the difference. Not surprisingly, Australians have a greater incentive to stay put and pay that mortgage. That means less supply on the market which, in turn, stops prices falling.

Given we are at close to full employment, it would take a massive global shock to push unemployment so high as to force people out of their homes and push prices sharply lower.

But the undeniable fact is that Australian real estate enjoyed a prolonged boom through the 1990s until 2008 fuelled by cheap and easy credit.

That credit boom has come to an abrupt halt. During the past 12 months, credit growth for housing has been the weakest in 40 years, ever since the Reserve Bank began compiling the data. Not surprisingly, housing prices have begun to weaken.

A market analyst, Greg Canavan, author of the Sound Money, Sound Investments newsletter, reckons the number of negatively geared investment properties purchased during the boom, many of them on 100 per cent loan-to-value ratios, will soon begin to slip into negative equity.

Negative gearing only works when capital values are rising. Right now they are not. That has the potential to produce forced sales of investment properties and a rise in bad debts among the banks. As we saw last time around, a relatively small rise in bad debts eats heavily into shareholder equity.

That's why our banks are under fire right now, why the short sellers have them by the curlies. That's why nervous investors will be hanging off every

[dave289]

Looks like some relief is already on the way. Look at the announcement made at 9.27 reguarding the commonwealth bank. It looks like a desperate move to help halt todays stock market plunge , will it ,we will see.


http://www.news.com.au/business/aust...-1226111305525

[trippytaka]

NZ was down 3% only 15 minutes into trading.

[mcnews]

I don't have Super or shares so none of this stuff tends to worry me :-)

[TheSneakiness]

My company is directly affected by the US but our half year profits were up a good amount. I'm not overly worried about the situation.

The scaremongering tactics however are going to see ordinary Australians spend even less so retail and tourism is going to be hit hard and it's going to be tough seeing your family and friends without work.

Mark my words.

[mr smith]

Originally Posted by GTP owner

People need to eat, no matter how bad things get. So agriculture is always going to be a necessary business. As is toilet paper. But TVs, magazines, expensive cars and the like are not. So I would be looking at businesses that are based on needs, not wants. ie Buy ag stocks, sell Harvey Norman

150 jobs in SPC Shepparton to go. I do agree non essential goods and services will be hit hard. Not the time to become a "life coach".

Collectable cars are going to take a massive hit as well. Lots of people laugh when I say Im going to pick up a good XR GT for $30K, that day is getting closer and closer.

[SB076]

Originally Posted by trippytaka

NZ was down 3% only 15 minutes into trading.

Aus market is down over 3.5%, But depending on where you sit some may take the opportunity to pick up some bargins which could stop the slide and may even reverse some of the loses. Guess we will find out later today.

[fmc351]

Doom and Gloom. ...DOOM AND GLOOM!!!

Originally Posted by flappist

Please ...

Pardon?


Where is flappist and what have you done with him?

[dave289]

Originally Posted by fmc351

Doom and Gloom. ...DOOM AND GLOOM!!!



Pardon?


Where is flappist and what have you done with him?

I had to make sure it was not april fools day when I first did a double take at the word moderater under his name ( only joking mods)...

[trippytaka]

Originally Posted by Rapid_Axe

My company is directly affected by the US but our half year profits were up a good amount. I'm not overly worried about the situation.

The scaremongering tactics however are going to see ordinary Australians spend even less so retail and tourism is going to be hit hard and it's going to be tough seeing your family and friends without work.

Mark my words.

I wish people would stop looking at this as if we are isolated... we are not. Because of our debt binge in the late 90s through to 2010 we are massively exposed.

All the industries keeping us afloat rely on
1) USA being strong
2) Europe being strong.

Why? they are China's two biggest creditors. Wipe them out for a few years and watch what happens to our coal and iron ore exports.

Not only that, if mums and dads lose 20% of their super, a lot of them will might be forced to sell up the investment properties to fund their retirement.

Now, also look at the negatively geared properties... they all rely on positive growth. We are now in egative growth. Less money in the economy and less access to credit on the international markets for our banks to lend = accellerated negatives for property. This in turn accellerates the flood of stock on the market and forces prices down.

Fast Forward a year of two and a large majority of investors and recent home buyers could be in negative equity to the tune of 20-25%. That means again,. less spending.

This is an economic cycle we don't want to be in. If it plays out as badly as it could, we're all up the creek.

So I suggest that anyone who thinks that they aren't exposed because they don't have share, take your head out of the sand!

[mcnews]

Of course we are all exposed. But momentary, or even few years blips on the share market are of no great concern to me. I don't plan on selling the house any time soon etc. People get in a blind panic about things that if people don't panic about, are likely not to be much of a problem for them. Get swept up in it all, which is what the economists and speculators want, to drive everything down so they can come in and buy up. It is a silly game played on paper by criminals.

[trippytaka]

Originally Posted by mcnews

Of course we are all exposed. But momentary, or even few years blips on the share market are of no great concern to me. I don't plan on selling the house any time soon etc. People get in a blind panic about things that if people don't panic about, are likely not to be much of a problem for them. Get swept up in it all, which is what the economists and speculators want, to drive everything down so they can come in and buy up. It is a silly game played on paper by criminals.

Unfortunately it's the other way around. The criminals are the ones who talk up the value of things, way over their true value - such as stocks and housing. All of these values have been driven by DEBT. The time has cmoe where the world is realising that the debts can't be paid with out a massive economic slow down.

This is an adjustment to reality, it's not being spoken down. We are headed through a correction to natural values. Unfortunately the only way there is a painful one.

I hope people learn this. Last GFC that was the lesson painted bright red on every wall in every town on earth. Somehow, the majority of the world missed the point and thought that we could just business and usual without a proper correction.

Debt is not the answer here. Let's pray that the world isn't hyper inflated yet again, because if it goes bang after another round of debt injection, the pain will be a lot more than a decade of recession!

[TheSneakiness]

Originally Posted by Rapid_Axe

My company is directly affected by the US

Originally Posted by trippytaka

I wish people would stop looking at this as if we are isolated... we are not.

Isolated??? Better re-read my first sentence hey?

I know full well I'll be in a job still after this simple because of the strong business position the company I work for is in. If I was in my old job I'd already be out on my **** in the dole line at Centrelink.

It seems the panic resides in the small business operator/mum & dad investment portfolios.

There is one simple reason my head will stay in the sand, and it's because until I hear that my current position is in jeopardy work and home wise I have absolutely nothing to worry about.

[Scott]

Originally Posted by mcnews

which is what the economists and speculators want, to drive everything down so they can come in and buy up. It is a silly game played on paper by criminals.

Originally Posted by trippytaka

Unfortunately it's the other way around. The criminals are the ones who talk up the value of things, way over their true value - such as stocks and housing.

same=same

[trippytaka]

Originally Posted by Rapid_Axe

Isolated??? Better re-read my first sentence hey?

I know full well I'll be in a job still after this simple because of the strong business position the company I work for is in. If I was in my old job I'd already be out on my **** in the dole line at Centrelink.

It seems the panic resides in the small business operator/mum & dad investment portfolios.

There is one simple reason my head will stay in the sand, and it's because until I hear that my current position is in jeopardy work and home wise I have absolutely nothing to worry about.

Sorry, i should have deleted that part of the quote, i meant it in response to the scare mongoring part. I don't think it's that at all. I think that people are reporting the truth this time around, for once.

If there's nothing to worry about for you in your job, then I am happy for you.

Unfortunately, looking at the wider economy and how that can resonate, I do think that there is something for us all to worry about.

[Gobes32]

Originally Posted by trippytaka

the article posted above

Interesting article, the notion of handing in the keys to your home and the bank wearing the loss reeks of irresponsibilty, how the banks came to allowing that sort of thing is beyond my rationale.

As for the negative gearing collapse, what that tells me is that people who entered the investment game in the last few years with not enough equity behind them will get kicked in the backside. Oh well, you play the game you sometimes lose..........

Would love a crystal ball to see how the rest of this year will play out, not because I wan't to get rich, but because I don't want to lose what I have.

[Professor Farnsworth]

last week from memory the AUD was 1.08 USD, check out this life feed:

http://au.finance.yahoo.com/q?s=AUDUSD=X

[burnz]

Originally Posted by Scott

same=same

ha ha they both nailed it, so i'm going to agree with you.

[FTe342]

Further to my earlier posts, the rate slide has started. Here are the CBA's new fixed rates effective this Friday 12/8

1st column =Product
2nd column - New Rate (p.a.)
3rd column = Change (p.a.)
4th column = Assessment Rate *(p.a.)
5th column = Comparison Rate(p.a.)

Fixed Rates Home/Investment Home Loans
1 Year Guaranteed Rate 6.59% -0.25% 9.31% 7.80%
1 Year Fixed Rate 6.74% -0.25% 9.31% 7.82%
2 Year Fixed Rate 6.74% -0.35% 9.31% 7.71%
3 Year Fixed Rate 6.74% -0.40% 9.31% 7.62%
4 Year Fixed Rate 7.14% -0.55% 9.31% 7.68%
5 Year Fixed Rate 7.14% -0.60% 9.31% 7.63%
7 Year Fixed Rate 7.74% -0.50% 9.31% 7.90%
10 Year Fixed Rate 7.74% -0.50% 9.31% 7.89%
15 Year Fixed Rate 7.74% -0.50% 9.31% 7.87%

MISA
MISA - 1 Year Guaranteed Rate 6.59% -0.25% N/A N/A

Fixed Rates Home/Investment Home Loans (MAV)
1 Year Fixed Rate 6.59% -0.25% 9.31% 7.23%
2 Year Fixed Rate 6.59% -0.35% 9.31% 7.16%
3 Year Fixed Rate 6.59% -0.40% 9.31% 7.10%
4 Year Fixed Rate 6.99% -0.55% 9.31% 7.19%
5 Year Fixed Rate 6.99% -0.60% 9.31% 7.17%
7 Year Fixed Rate 7.59% -0.50% 9.31% 7.47%
10 Year Fixed Rate 7.59% -0.50% 9.31% 7.52%
15 Year Fixed Rate 7.59% -0.50% 9.31% 7.56%

The second set of figures is for MAV which is the CBA's Pro Pack that gets you rate reductions in exchange for a fee depending on size of your borrowings

Interesting to note the 1,2,& 3 yr fixed rates will now be below the best current variable rates on offer. Some rate watchers are predicting a 0.5% decrease by RBA anytime soon

[fmc351]

Originally Posted by Professor Farnsworth

last week from memory the AUD was 1.08 USD, check out this life feed:

http://au.finance.yahoo.com/q?s=AUDUSD=X

The conversion rate has been great if you wanted to buy from the US, and everyone loved it, but its a sign. The strengthening of the US dollar despite the downgrade is a positive sign.

Apparently there are investigations underway into S&P. There are gains to be made by people in the event of panic and some MIGHT seek to abuse the process.

[Professor Farnsworth]

Originally Posted by fmc351

The conversion rate has been great if you wanted to buy from the US, and everyone loved it, but its a sign. The strengthening of the US dollar despite the downgrade is a positive sign.

Apparently there are investigations underway into S&P. There are gains to be made by people in the event of panic and some MIGHT seek to abuse the process.

yes it's a sign indeed, not necessarily one that's going to stay around though

[SB076]

Originally Posted by fmc351

Apparently there are investigations underway into S&P. There are gains to be made by people in the event of panic and some MIGHT seek to abuse the process.

So the US Government didnt agree with the downgrade and has decided to investigate S&P - bit concerned by that - surely they can conceed that their debt levels were high and can understand why they were downgraded. Other agencies have them as negative outlook which means they may downgrade them as well (Will be interesting to see what Moody's decides as they are owned by Warren Buffet and he has already said that S&P shouldnt have downgraded Americas rating)

Was a bit concerned with Obamas speech - something along the lines of America is and always will be a tripple A rated country. Their rating is set by outside agencies (S&P just happen to be the biggest and argueably most influential) A rating it is and be shouldnt be dictacted by politics. If the rating is that important to them, then they need to make some changes to regain their rating. Otherwise why dont Greece and Ireland simply set their own rating?

However in thinking about it, no doubt if you worked at S&P and had prior knowledge of the downgrade you could make a reasonable amount of money