Potential Big GFC Discussion Thread - Page 7

mik · 09-08-2011, 01:15 PM

yahoo article says 65 billion wiped off local shares today, the downward spiral continues.

**Professor Farnsworth** · 09-08-2011, 01:18 PM

Quote:

Originally Posted by SB076

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

yes, put-options have been used 'dodgily' for a long time

SB076 · 09-08-2011, 01:33 PM

Quote:

Originally Posted by Professor Farnsworth

yes, put-options have been used 'dodgily' for a long time

Yep could short sell on the Friday (prior to the annoucement) As Gobes stated, it would be great to have a crystal ball - well I suppose some people have access to information that enables them to be guage future movements, better than the general public

fmc351 · 09-08-2011, 01:34 PM

Quote:

Originally Posted by SB076

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

No its not. In dollar terms it sounds like a lot, but in the same way a millionaire buying a Merc isnt realy spending anymore than someone buying an XR6. Its all proportional in terms of cost, note not price. Also note Im not saying the Debt level is great, Im saying its not all that bad considering the the times we've been living in since Sep 11, and its very much related as a large part of the debt is related to funding two wars, along with tax reduction and 'trickle down' economic policies over the last 10yrs. Clinton left the US with a Debt to GDP ratio of around 56%, the latest figures Ive seen show it around 92% (est will be around 95% this year), and Obama inherited 86%. The forecast in 2001 was a very rosy one for the US, something happened. Given our own prosperity in that same time frame, Id say there was nothing wrong with the forecast.

US Debt to GDP is very similar to ours. While countries that people are bleating about that the US are heading towards like Greece have Debt to GDP ratios of more than 130%.

S&P are being investigated to establish if they had sound financial reasoning for the announcement, or other motives such as 'rattling' the market for certain people to take advantage of. Its not unheard of. Add in to that S&P got many of the large companies in the GFC very wrong, they failed to downgrade companies despite those companies being in very clear danger. Again, motivations could be questioned. They have a poor recent record. In the meantime, other ratings agencies have done no downgrading of the US, a negative outlook is not the same as a downgrading or a sign it will be, its just a status that says the outlook is not so rosy as straight out AAA. Not to be ignored, but not something to panic over.

Its less about the employees of S&P, and more about the heads and their close friends. If anyone that is.

Theres enough reason to warrant investigation IMO.

charles_wif_xf · 09-08-2011, 01:41 PM

http://www.usdebtclock.org/

Look at the entry called "US Unfunded Liabilities". That is the true US national debt. Then chuck on top the $612 trillion in currency and credit derivatives...

If my maths serves me correctly, $722 trillion divided by $14 trillion (GDP) is... 51 (and change).

fmc351 · 09-08-2011, 01:49 PM

Quote:

Originally Posted by Professor Farnsworth

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

Yeah well, thats the 14 trillion dollar question isnt it?

Depends on why the AUD is falling to the US, is it some level of confidence in the $US returning, or is it a lack of confidence in the $AUD. So I guess im saying is the $AUD falling, or is the $US strengthening?

Quote:

Originally Posted by charles_wif_xf

http://www.usdebtclock.org/

Look at the entry called "US Unfunded Liabilities". That is the true US national debt. Then chuck on top the $612 trillion in currency and credit derivatives...

Mate those types of liabilities have been around for more than 60 yrs. Its all a very scary looking meter, but it really is just fear induced. Its no different to buying a house, you rarely earn annually what it takes to buy it. Let alone after all the costs come from you annual wage to pay for everything else. Yet do it we do.

Nations have longer lifetimes than people buying a house. The entire capitalist system is a pyramid, or a ponzie scheme, but would you prefer communism?

SB076 · 09-08-2011, 01:50 PM

Quote:

Originally Posted by fmc351

No its not. In dollar terms it sounds like a lot, but in the same way a millionaire buying a Merc isnt realy spending anymore than someone buying an XR6. Its all proportional in terms of cost, note not price. Also note Im not saying the Debt level is great, Im saying its not all that bad considering the the times we've been living in since Sep 11, and its very much related as a large part of the debt is related to funding two wars, along with tax reduction and 'trickle down' economic policies over the last 10yrs. Clinton left the US with a Debt to GDP ratio of around 56%, the latest figures Ive seen show it around 92% (est will be around 95% this year), and Obama inherited 86%. The forecast in 2001 was a very rosy one for the US, something happened. Given our own prosperity in that same time frame, Id say there was nothing wrong with the forecast.

US Debt to GDP is very similar to ours. While countries that people are bleating about that the US are heading towards like Greece have Debt to GDP ratios of more than 130%.

S&P are being investigated to establish if they had sound financial reasoning for the announcement, or other motives such as 'rattling' the market for certain people to take advantage of. Its not unheard of. Add in to that S&P got many of the large companies in the GFC very wrong, they failed to downgrade companies despite those companies being in very clear danger. Again, motivations could be questioned. They have a poor recent record. In the meantime, other ratings agencies have done no downgrading of the US, a negative outlook is not the same as a downgrading or a sign it will be, its just a status that says the outlook is not so rosy as straight out AAA. Not to be ignored, but not something to panic over.

Its less about the employees of S&P, and more about the heads and their close friends. If anyone that is.

Theres enough reason to warrant investigation IMO.

Correct me if I am wrong, however I thought Australia debt to GDP was less than 30%. I beleive the concern is that the US is getting closer to the 100% figure which is what has some people concerned.

geckoGT · 09-08-2011, 01:56 PM

Quote:

Originally Posted by fmc351

Yeah well, thats the 14 trillion dollar question isnt it?

Depends on why the AUD is falling to the US, is it some level of confidence in the $US returning, or is it a lack of confidence in the $AUD. So I guess im saying is the $AUD falling, or is the $US strengthening?

Not my area of expertise obviously but wouldn't the answer to that question be in the comparison of those respective currencies with other major currencies such as the British Pound, Euro, Yen etc?

fmc351 · 09-08-2011, 02:02 PM

Quote:

Originally Posted by SB076

Correct me if I am wrong, however I thought Australia debt to GDP was less than 30%. I beleive the concern is that the US is getting closer to the 100% figure which is what has some people concerned.

30%? Bwahahahahqhahahasaha cough choke... oh dear god thats funny.

Ours is around 95%. Or was in 2010.

Quote:

Originally Posted by geckoGT

Not my area of expertise obviously but wouldn't the answer to that question be in the comparison of those respective currencies with other major currencies such as the British Pound, Euro, Yen etc?

Well yes and no. Depends on what is happening to those currencies too from their own respective economic positions.

SB076 · 09-08-2011, 02:04 PM

Quote:

Originally Posted by fmc351

30%? Bwahahahahqhahahasaha cough choke... oh dear god thats funny.

Ours is around 95%. Or was in 2010..

http://en.wikipedia.org/wiki/List_of...by_public_debt

I was slack and got some info from Wikipedia (yes I know not the best source of info) But I remember some statment awhile ago about Australias debt and it wasnt too bad.

burnz · 09-08-2011, 02:09 PM

Quote:

Originally Posted by fmc351

30%? Bwahahahahqhahahasaha cough choke... oh dear god thats funny.

Ours is around 95%. Or was in 2010.

Well yes and no. Depends on what is happening to those currencies too from their own respective economic positions.

22.4% as of june 30 2010

sorry SB076 seen after posting haha

any way source Australian bureau statistics
http://www.abs.gov.au/ausstats/abs@.nsf/mf/5206.0

SB076 · 09-08-2011, 02:21 PM

Quote:

Originally Posted by burnz

22.4% as of june 30 2010

sorry SB seen after posting haha

any way source abs
http://www.abs.gov.au/ausstats/abs@.nsf/mf/5206.0

Cheers thats a far better source than mine.

trippytaka · 09-08-2011, 02:54 PM

I think the confusion might be the household debt. I thought that was at levels around 120% of income.

fmc351 · 09-08-2011, 03:01 PM

Quote:

Originally Posted by burnz

22.4% as of june 30 2010

sorry SB076 seen after posting haha

any way source Australian bureau statistics
http://www.abs.gov.au/ausstats/abs@.nsf/mf/5206.0

Well lets keep numbers straight, public debt or external debt? Are we including private debt, or just the public debt?

Because the US number of $14 trillion which has everyone scared is external debt. And when it comes to external debt, we both have an external debt position that is 95% of GDP.

Quote:

Originally Posted by SB076

http://en.wikipedia.org/wiki/List_of...by_public_debt

I was slack and got some info from Wikipedia (yes I know not the best source of info) But I remember some statment awhile ago about Australias debt and it wasnt too bad.

Nothing wrong wiki in most cases. 30% is not exactly possible when national debt is pushing $1 trillion, and GDP was $1.2 trillion (2009) and I think $930 billion in 2010. The 14 trillion everyone is talking about that the US owes is external debt, and that is 95% of their GDP, which is 45k for every citizen. Ours is also 95% yet is slightly more per person around $52k per person.

http://en.wikipedia.org/wiki/List_of..._external_debt

SB076 · 09-08-2011, 03:19 PM

Quote:

Originally Posted by fmc351

Well lets keep numbers straight, public debt or external debt? Are we including private debt, or just the public debt?

Because the US number of $14 trillion which has everyone scared is external debt. And when it comes to external debt, we both have an external debt position that is 95% of GDP.

Nothing wrong wiki in most cases. 30% is not exactly possible when national debt is pushing $1 trillion, and GDP was $1.2 trillion (2009) and I think $930 billion in 2010. The 14 trillion everyone is talking about that the US owes is external debt, and that is 95% of their GDP, which is 45k for every citizen. Ours is also 95% yet is slightly more per person around $52k per person.

http://en.wikipedia.org/wiki/List_of..._external_debt

I would assume we would be refering to public debt, according to the link I posted the US public debt is far greater than Australia relative to GDP

EDIT Market is almost back to where it was at the start of the day and may even end up in positive territory - Thats an impressive turnaround - think the only think we can be certain of is volatility. Who would thought at 11am the market was over 200 points down - now its less than 10 points down and may even end up in positive territory.

trippytaka · 09-08-2011, 03:52 PM

Quote:

Originally Posted by SB076

I would assume we would be refering to public debt, according to the link I posted the US public debt is far greater than Australia relative to GDP

EDIT Market is almost back to where it was at the start of the day and may even end up in positive territory - Thats an impressive turnaround - think the only think we can be certain of is volatility. Who would thought at 11am the market was over 200 points down - now its less than 10 points down and may even end up in positive territory.

Amazing. Simply amazing. up 0.5%. There are some bears out there with balls the size of watermelons. Nice work lads (and gals).

SB076 · 09-08-2011, 04:11 PM

Well must admit I was wrong with my prediction - I am surprised - I didnt think you could make 5% return within one day betting on the all ords.

Lot to be said for buying good stock at a good price and ignoring the ups and downs of the markets. I still beleive their are issues with the economy and suggest we may end in a recession (not depression) But hopefully for all this either doesnt eventuate or is only for a very short period of time

trippytaka · 09-08-2011, 04:18 PM

Quote:

Originally Posted by SB076

Well must admit I was wrong with my prediction - I am surprised - I didnt think you could make 5% return within one day betting on the all ords.

Lot to be said for buying good stock at a good price and ignoring the ups and downs of the markets. I still beleive their are issues with the economy and suggest we may end in a recession (not depression) But hopefully for all this either doesnt eventuate or is only for a very short period of time

Agreed, no one wants a recession... but a QE3 could be so dangerous for the long term outcome. America and the rest of the world just can't keep borrowing money to plug bigger and bigger holes.

**buggerlugs** · 09-08-2011, 04:29 PM

Quote:

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 :(

Wash your mouth out, Shame on you...........spreading good economic news on here.....................

z80 · 09-08-2011, 04:36 PM

Quote:

Originally Posted by buggerlugs

Wash your mouth out, Shame on you...........spreading good economic news on here.....................

We have been getting very,very healthy orders from WA and QLD for the last 2 months.

We are an IT equipment supplier.

Buttnekid · 09-08-2011, 04:39 PM

All I can say is I am glad I ummed and ahhed and listened to my gut and not call my broker at 8.20 am because I would be spewing right now.

There is widespread doom mongering and panic selling of stocks going on in the world but when you look at the underlying financials of most companies in Australia, they are still sound and their value has not depreciated.

People need to stay positive and not buy into this doom and gloom peddling because that will achieve only one thing, a recession that was willed into existance.

**buggerlugs** · 09-08-2011, 04:40 PM

Quote:

Originally Posted by z80

We have been getting very,very healthy orders from WA and QLD for the last 2 months.

We are an IT equipment supplier.

Yep, I just had my second biggest month in business after 17 years of self employment.....

Scott · 09-08-2011, 04:43 PM

Quote:

Originally Posted by trippytaka

There are some bears out there with balls the size of watermelons. Nice work lads (and gals).

Bulls not bears. There seemed to be a lot of people spruiking the "bear trap" stories last night... nothing would surprise me.

Sam_Boss260 · 09-08-2011, 04:47 PM

An old family friend once told me, do the opposite to what the mainstream people do. If everybody is rushing out to buy realestate... then wait. If everybody is rushing to sell... then wait and don't sell.

Seems to ring true in this instance.

kocho · 09-08-2011, 04:47 PM

The $AUD was $1.08 as mentioned last week. Personally, for me, I'm happy it's down to $1.02

Here I am waiting for it to go down a bit more!

Paxton · 09-08-2011, 05:17 PM

Quote:

Originally Posted by kocho

The $AUD was $1.08 as mentioned last week. Personally, for me, I'm happy it's down to $1.02

Here I am waiting for it to go down a bit more!

Me too. Mid to late 80¢ is a good figure for me.

z80 · 09-08-2011, 05:24 PM

Quote:

Originally Posted by buggerlugs

Yep, I just had my second biggest month in business after 17 years of self employment.....

Congratulations....You've earned it....

cheap · 09-08-2011, 05:45 PM

I think those people proposing "the end" may be a little disappointed

As for the current market fluctuations, in my opinion, this is again irrational/emotional behaviour akin to (and making as much sense) as a dog chasing its own tail.

The facts are last week there were many blue chip companies with sound business plans, great profits, cashed up and paying good returns.

This week those same blue chip companies are available at better prices, good hunting!

WMD351 · 09-08-2011, 05:53 PM

Quote:

Originally Posted by Scott

same=same

Beat me to it, that was my first thought on those two posts

AMGC63 · 09-08-2011, 06:08 PM

Well well well.. i got home tonight and low and behold the House was still there, power still working and dinner on the table.. i thought it was all supposed to dissapear today?

Ive had the busyiest 1/4 in 5 years and Booked solid till Xmas.. not everything is as bad as some here want it to be or want to paint it.