Ray you been looking at houses in Noosa yet?

:lol:

 

Ray you been looking at houses in Noosa yet?

:lol:

Sorry, I prefer to stay in Mexico. I want a place in north east/south east Gippland, but everything is still too bloody expensive. People want Toorak prices for tiny shacks.

Cheers

Ray

 

Ah the failure of extreme capitalism.

Last time there was a major financial upheval where millions suffered there was a world war. Hope it doesnt come to that.

 

Julia and co are in "lah lah lah not listening" land and the libs just disagree on everything cause that is now what they stand for.

When it goes bad, and I believe it will, the government will be totally blind sided and won't know what hit them.

First thing will be huge pressure on the RBA to reduce interest rates then watch the Aussie dollar collapse as all the Aussie dollar speculators pull there cash virtually over night.

If you have time check out Mish's Global Economic Trend Analysis

Mish is one of the best global economic/financial commentators I have come across.

Niall Ferguson is good too but he has been very quite of late in terms of blogging.
His book "ascent of money" is a must read as it shows how history in economics terms keeps repeating itself. There is the TV series too.

Cheers

Justin

 

Hey! A carbon tax would work here. When the second GFC happens, the government will now have money to give everyone another $900 to get over the crisis.

Cheers

Ray

 

Watch the carbon tax evaporate!

Cheers

Justin

 

I didn't get no $900. I got 'dick.' How do I manage to get it next time?

Do I have to lie to anyone? If I say I'll vote Labor will I get it? Nah...guess not, couldn't even say I'd vote Labor, never have and never will.

 

Be careful. When there are too may zeros 1 000 000 000 000 can be made 1 000 000 000.....

 

What fairy land do you live in ray??...... do you really think that there is a better government ready ATM to take charge and guarentee that australia wont go down this slippery slope..................i didnt think so, they are all as bad as eachother, and due to the global market the rules of economics will always need people in poverty to stop inflation, if everyone was making heaps of cash the inflation rate would go through the roof as would interest rates etc, you can thank the number of unemployed for your interest rates being so low cause if every one was working interest rates would be through the roof , house prices would go out of control , new building projects would slow down, it is all a balance thing, and even though labor has only delayed the gfc hiting australia it has done as any other government should have


it is the same old thing with political threads , it doesnt matter who is in charge as you will always have people complaining that they are crap, they all lie and they all stuff up, there is no one better to do the job cause what is available is also crap, if you think you can do a better job then go be a politician and show us how to keep everyone happy................... somehow i dont think you could do anywhere near as good , politics isnt about keeping people happy its a balance game to keep things moving at a steady and controlled pace

 

What fairy land do you live in ray??...... do you really think that there is a better government ready ATM to take charge and guarentee that australia wont go down this slippery slope..................i didnt think so, they are all as bad as eachother, and due to the global market the rules of economics will always need people in poverty to stop inflation, if everyone was making heaps of cash the inflation rate would go through the roof as would interest rates etc, you can thank the number of unemployed for your interest rates being so low cause if every one was working interest rates would be through the roof , house prices would go out of control , new building projects would slow down, it is all a balance thing, and even though labor has only delayed the gfc hiting australia it has done as any other government should have


it is the same old thing with political threads , it doesnt matter who is in charge as you will always have people complaining that they are crap, they all lie and they all stuff up, there is no one better to do the job cause what is available is also crap, if you think you can do a better job then go be a politician and show us how to keep everyone happy................... somehow i dont think you could do anywhere near as good , politics isnt about keeping people happy its a balance game to keep things moving at a steady and controlled pace

Do you seriously believe that the current Labor/Greens government is no better than what the Coalition would offer?

The entire country is going tits up and there are still people that appear to support the Labor/Greens shambles.

Cheers

Ray

 

Lets look at it
IF people didnt borrow beyond their means
(yep most spend 110% of an expendable 100% ,how does that work ???)
Big mistake
Why on earth would people borrow against an apreciating asset and buy depreciating asset
(people borrowed against their house to buy new cars )
Mistake again
Then the government waved the $900 carrot , and people fell to their knees
But there aint nomore $$$ left to do it again

The unemployment level ,ok some say its high ???
Lets say 5 %,lets even say 10% (which its not)
That still leaves 90-95 % working
Thats still alot working
It doesnt matter what clown we have steer the country
There is as mentioned another clown in the making

The people who didnt borrow upto their necks will be fine,those that did , well whos fault is that ???
Did the banks hold a gun to your head ,when you borrowed all that money ???
Yeah the government maybe somehow can be blamed for the world money issues
But IF people lived within there means , then it would be a whole lot better
Its the old "Wants" Vs "Needs"
You dont "Need" that 5 beda, 3 bathroom water front house
You "Want" it

 

sigh










keeps loading the ammunition

 

sigh










keeps loading the ammunition

ditto.

 

The emerging situation is not about how people have managed their finances, it's about how the government has managed our finances and propose to do so in the future. The intent is to tax a wide range of industries to solve a problem that most likely doesn't exist and even if it did, would have no effect, and none of our competitor countries is doing anything about it anyway. Our prime export industries will in many respects become uncompetitive and thus the tax being extracted from those industries will dry up/reduce significantly.

What it also means is that those on high(ish) incomes will support those on lower incomes, so that they don't feel the pain. So a new form of welfare has suddenly been created. The push is also to phase out energy sources that make us competitive and provide economical power supply, and introduce alternatives that haven't been tested and will cost enormous amounts of money. So, if/when, another GFC eventuates, the government will have nothing in the piggy bank when it may really need the money.

Explain to me why all of this is a good thing and it's what we should expect from good government?

Cheers

Ray

 

See, you've got it wrong once again. The US financial collapse, and then the ensuing GFC (when the US sneezes, the world gets a cold), was actually caused by the Clinton administration enacting legislation that made it effectively mandatory for banks to give loans to low-income people, who effectively had no means with which to pay back the loans.

That led to a whole raft of monetary games by the banks and financial institutions to make huge profits, but when the loans started to be defaulted on in vast numbers, the crisis was well on its way and the collapse was snowballing. Yes, the banks and financial institutions were the catalyst the ensured that the GFC happened, but it was the Clinton administration that allowed it to happen by trying to control how and to whom the banks issued loans. The financiers etc took advantage of a flawed policy and the rest is history.

When governments try to run business ventures, they are usually bound to fail.

I might also point out that 'divine right of kings' tends to be a trait of the Left, always preaching to others how they should live.

Cheers

Ray

 

I would say that the GFC had many causes; you can't pin it on one law or bad policy.

The Community Reinvestment Act (which is the law Ray! refers to) wasn't passed by the Clinton Administration but under Carter, back in 1977.

And yes, the growth in credit derivatives did nothing to help.

Still, if I had to say what caused the GFC, it is debt and limited liability.

Read what Australian economist Steve Keen (himself a disciple of Hyman Minsky) has to say about debt. Then look up the Minsky cycle on Wikipedia.

The other problem is limited liability; if an investment bank borrows money, bets big and wins, they keep the profits after they have paid off their creditors. If they bet big and lose, their creditors simply run to the government for another bailout.

Nothing substantive has been done about either debt or limited liability, so we are doomed to repeat the mistakes of 1970-2008.

See, you've got it wrong once again. The US financial collapse, and then the ensuing GFC (when the US sneezes, the world gets a cold), was actually caused by the Clinton administration enacting legislation that made it effectively mandatory for banks to give loans to low-income people, who effectively had no means with which to pay back the loans.

That led to a whole raft of monetary games by the banks and financial institutions to make huge profits, but when the loans started to be defaulted on in vast numbers, the crisis was well on its way and the collapse was snowballing. Yes, the banks and financial institutions were the catalyst the ensured that the GFC happened, but it was the Clinton administration that allowed it to happen by trying to control how and to whom the banks issued loans. The financiers etc took advantage of a flawed policy and the rest is history.

When governments try to run business ventures, they are usually bound to fail.

I might also point out that 'divine right of kings' tends to be a trait of the Left, always preaching to others how they should live.

Cheers

Ray

 

And the birth of derivatives and CDO's (colateralised Debt Obligations) and other shady financial 'products' as a result of an unregulated banking system had NOTHING to do with it?

The conservative right in both the USA and here would have the poor living in boxes if it could, just so the precious few could make a squillion. A lack of regulation destroyed the financial systems.

 

why is it that when read the paper every sunday, the letters from everyday people, 99% of the time i agree 100%.. i even agree to mostly what gets said on threads like these..

but for some reason these issues and ideas hang around?
this is a democracy yes?
51% beats 49%

 

Joolia voice on "Fellow Orstraillians. Moving forward, this is the global recession we had to have."

 

hey guys, i dont really understand all of this... but me and the missus are thinking of buying our first house.

is this a good idea at the moment? do we wait, can you get a home loan approved now and wait till houses get cheaper???????? just keep renting forever??

sorry lol, seems like a good group of people to ask

 

Quite interesting knowing other people have read Steve Keen's work. I have been following him since 2008 and I'm not saying he is the be all end all but I think his take on economics is far superior to conventional wisdom I.e. Neoclassical Economics.

I have a degree in economics and I was doing a science degree at the same time combined with some real world experience as a mature age student. Studying economics left me feeling really disappointed in the discipline. I really liked economics as a concept and still consider economics a significant pastime BUT I have pretty much thrown away anything I learnt at uni it's almost all vague assumptions built on more assumptions. Economics is an absolutely woeful discipline and I will not call it a science it does not even come close.

In fact studying a science degree and economics degree at the same time proved beyond all doubt how woeful economics is. But at the time I had to learn the rubbish to pass the subjects etc etc.

It wasn't till discovering Steve Keen that all my questions about the inconstancies and sheer lack of predictability of economics was properly answered.

For those interested you should read: Debunking Economics, it divided up into easy and hard sections for each chapter and anyone in an interest in economics will learn a lot. The main thing you will learn is that Neoclassical economics has nothing to do with real life absolutely nothing. It's in fact bordering on religion/dogma that is so engrained and un challenged that it's truly frightening.

You need to keep in mind that so many government decisions are made in conjunction with economists using standard economic theory. It's the blind leading the blind. You wonder why government policy fails so often leads to unintended consequences it is almost always due to economic theory.

Governments hold economists in such high regard almost like high priests.

There was only a dozen non neoclassical economists in the WORLD that predicted the global credit crunch or the GFC as we call it in Australia. In fact economists the world over thought the boom times would never end and the "great moderation" of finical global stability had finally arrived.

Almost an exact replica of what happened in 1929 before the crash. In fact if you check out graphs of the Great Depression it is almost exact match for what is happening now. Food for thought.

The crisis cause was due to greed on a scale never seen before in the history of the world. The greed was fairly simple and created the worlds biggest ponzi scheme that is the world financial markets. (Finance, Insurance and Real Estate) FIRE for short.

The crash was a by product of continuously unregulated banking and finance markets, deregulation was seen as the solution to the free market. Turns out the free markets is not so free, not self regulating and does not pass on benefits to everyone as it is supposed to in standard economic theory.

Basically financial markets starting with banks make money by lending money.

I'll repeat cause it's really really important to understand

BANKS MAKE MONEY BY LENDING MONEY.

Now on it's own that is fair and reasonable but banks soon realized that the more they lowered the lending standards and with more deregulation they could loan money to more and more people and make more and more money. A large part of this was borrowing to people to buy property

Lending money for property investment is like the goose that lays the golden egg and is perceived as a means of making near unlimited money with negligible risk, perceived at zero risk.

Lending for property is much less risky than lending for more productive purposes such as manufacturing just for an example.

There is nothing inherently wrong with loaning money for property it becomes a problem when that is the majority of the banks lending. Basically it distorts the market by diverting money from more beneficial areas. Very simply the more money that is borrow/lent for property the more property increases in price, the more property goes up in value the more it covers the bank risks. This creates a serious positive feed back loop.

All the while this was going on banks were lending money hand over fist. Remember when every second person had a share portfolio with a margin loan? Just another money spinner for the banks. But it had unforeseen consequences as margin lending helped increase the stock prices on the share market as it allowed people into the market that didn't actually have any money. Lets not forget people that invested their life savings through dodgy financial companies all betting on either the stock market or property. During a boom it's all a one way bet, stocks always rise and so does property for ever you can't loose.

Property and shares amongst other investment vehicles are speculative. There is nothing wrong with speculating but if a large percentage of all financial transactions are based on speculative investment that almost always involves "irrational exuberance" you are going to have a problem/crash.

The whole mess is continuing to fall apart.

Now having established that banks make money by lending money and to make more money just lend more something very interesting happens. GDP goes up and you have an economic boom time. Credit drives economic growth in fact the higher the level of loans/credit the lower unemployment will be. With out fail the data shows that during times of low unemployment people on average carry a lot of debt.

Debt creates economic growth but there is an upper limit to how much debt an individual, business, company or even a country can ultimately handle. The problem is that the more debt you have the more of your income goes to servicing the debt and less available for spending unless you choose to borrow more. It's a vicious circle for many.

So basically the economic boom that we had was built on mountains of debt that began in the 1970's and at some point someone has to be paid whilst debts are being paid down economic growth/GDP goes down until the next debt cycle. This time there won't be another debt cycle only debt deflation and de-leveraging and slow if not negative economic growth.

Another great depression.

I'll post some more later. For those interested check out TalkFinance.net - Powered by vBulletin and google Steve Keen.

Cheers

Justin

 

Quite interesting knowing other people have read Steve Keen's work. I have been following him since 2008 and I'm not saying he is the be all end all but I think his take on economics is far superior to conventional wisdom I.e. Neoclassical Economics.

I have a degree in economics and I was doing a science degree at the same time combined with some real world experience as a mature age student. Studying economics left me feeling really disappointed in the discipline. I really liked economics as a concept and still consider economics a significant pastime BUT I have pretty much thrown away anything I learnt at uni it's almost all vague assumptions built on more assumptions. Economics is an absolutely woeful discipline and I will not call it a science it does not even come close.

In fact studying a science degree and economics degree at the same time proved beyond all doubt how woeful economics is. But at the time I had to learn the rubbish to pass the subjects etc etc.

It wasn't till discovering Steve Keen that all my questions about the inconstancies and sheer lack of predictability of economics was properly answered.

For those interested you should read: Debunking Economics, it divided up into easy and hard sections for each chapter and anyone in an interest in economics will learn a lot. The main thing you will learn is that Neoclassical economics has nothing to do with real life absolutely nothing. It's in fact bordering on religion/dogma that is so engrained and un challenged that it's truly frightening.

You need to keep in mind that so many government decisions are made in conjunction with economists using standard economic theory. It's the blind leading the blind. You wonder why government policy fails so often leads to unintended consequences it is almost always due to economic theory.

Governments hold economists in such high regard almost like high priests.

Cheers

Justin

Hi Justin

Sorry for 'cherry picking' your post, and it is a pearler!

I totally agree! Economics is quasi science and more a religion PARTICULARLY neo classical. And these are the people that our govt's listen to! Nine times out of ten they RARELY (if EVER) accurately interpret what happened, let alone agree on what's going to happen in the future!

But look at where they sit in our govt's and private sector? They run the show and scare the crap out of us with their 'religious' BS show!

If there was an econo-political continuum with absolute communism at one end and unfettered, unregulated free market capitalism at the other, I just reckon we need to move more toward the centre than we are now. No-one would dispute that communism failed, the other extreme is just as much a failure.

Capitalism can work for everyone; up until the mid to late 70's when the vast majority of families were single income, could afford to buy a house, a car and holiday every year it did! It wasn't until the extreme came into being (Reagan-omics, Thatcherism etc) that it went too far.

The US obsession with small govt and deregulation (or self regulation) are examples of going too far. Govt's job is to regulate, to keep things 'safe' for everyone, not let a few make fortunes by gouging the majority of us unreasonably.

Let govt's regulate and GFC's won't happen.


Socialist Dave

 

Classical economics is the only so-called "science" that I know of that has so little use for data and facts that don't fit the models.

 

Agreed Justin!

Competition is something that is the cornerstone of a 'free market', but in an environment free of regulation (govt intervention), the competition is annihilated. COles and Woolies are the prime example in Oz! The 'survival of the fittest' element is what kills small businesses and drives wages to levels that drives wages below poverty level.

The free market is a farce held up by the bishops of economics as the saviour........AND IT AIN'T.

Move a bit back to the Left on the economo-political continuum and capitalism can remain, but with govt controls to protect the populace against the ravenous profit driven cretins that have come into being over the last 30 years.

 

Guys, I've read this thread and I'm worried. I've got no debt and I own my own house, but I don't have a lot of super and what I have is largely in the stock market through Colonial First State. I've been told that State Super are advising people to convert their super to cash and I'm inclining the same way, although doing so would cystallise the losses I've already incurred.

I figure that if there's rampant inflation at least I'll do OK in cash.

Your thoughts?

 

I'm in a similar boat to you and fully understand your reasoning, but if we all do that we compound the situation dramatically. Leaving mine where it is.

Thanks Dave.

I agree with your comments. Communism don't work nor does capitalism. Need something in the middle but we must throw out all current economic theory and start again.

My hot tip for everyone is to finalize your overseas buying as the the Aussie dollar will drop so fast it won't be funny. There won't be an interest rate rise but there will be some significant downward pressure on interest rates and all the speculation on the Aussie dollar will see it drop well below $1 US.

Cheers

Justin

I certainly hope your right and soon.

 

Well worth a watch:

YouTube - ‪Max Keiser with Steve Keen - Debt deflation (8-Jul-11)(NWO ECONOMICS series)‬‏

Cheers

Justin

 

Just watching an interesting finance programme here, talking about the S&P downgrade of US economy. The majority of US debt is owned by 4 countries, the two highest are China 1.2 trillion (a little higher than I expected) and Japan at 800+billion.

The interesting point they had was relating back to the nuclear "mutual destruction" policy of the Russian cold war years, this is the 21st century financial equivalent but this time with China. The US is China's biggest customer by far, they can't afford to stand by and see the US economy go down the gurgler, they must continue to support it or they fail as well.

Interesting, Communism and Democracy intertwined and apparently beyond financial separation.

 

Interesting, Communism and Democracy intertwined and apparently beyond financial separation.

Whilst Chinese government controls pretty much everything, it actually allows profit making and is actively encouraging private endeavour to a great extent; a sort of Chinese Capitalism.

Cheers

Ray

 

Here's a quote from an Age writer:

So what to do if you are the Greens in the spring of 2011? Depends what the endgame is.

If your collective ambition is to replace Labor as the party of the centre-left, then you play the long game. It's a zero-sum equation. You let Labor languish even if you take a hit in the 2013 election; you bank all the reforms of this term as your own, compete aggressively and care little what the consequences are.

If your collective ambition is long-term coalition with Labor, either formally or informally, then you look for ways to assist Labor's recovery. You give the Gillard minority government some breathing space. But given the problem of Labor's divided constituency, that's more complicated than it sounds.

If you use language like Brown did last week, referring positively to a ''Green-Gillard'' agenda, you are actually stroking the left, not the centre. You aren't criticising, that's true, but you don't help Labor's problem of bleeding votes to the right.

That ''team'' terminology alienates Abbott's battlers. Out there in the ''old economy'' where people make things and pollute with abandon, teeth gnash and blood boils.

Where to for the Greens: to stay with or try to replace Labor?

What exactly is the new economy?

Cheers

Ray

 

What exactly is the new economy?Cheers.Ray

Obviously this is where you don't manufacture anything, buy it from China and let them do the polluting, tax the living s*** out of the mining industry until it moves to more enlightened countries. At this this stage AU will be a backwater, Bob will be King of his world and the greens will be happy. Maybe we could get a new Flag and National Anthem and call the place Hobbitville.

 

Interesting!

Just yesterday I was reading an article in 'Time' mag about the 'interesting' way the Chinese work and how they have 'evolved' as an economic power in terms of Foreign Affairs. The centralised way they deal with things really will present as a challenge to the rest of the world who don't have the power over industry that the Chinese do.

There was also something about the Chinese not devaluing their currency (as they have central control of it) and this action affecting the US debt problem. I didn't understand this bit- Justin?

Could be interesting as everyone wants to 'play the game' with China, but China plays by THEIR rules. If the 'referee' (whoever that is in this case) doesn't have the balls to pull them up and make them play by the common set of rules and the other players don't jack up, China will win by a huge margin because the rest of the world doesn't have the capacity to control industry as much as the Chinese.

The Chinese are also still very patriotic and they are playing this bow very well with their young people with the govt controlled media. Patriotism is something that has fallen by the wayside for most western liberal democracies because it gets in the way of making money! How can a corporate entity spruik about buying American, when they relocated factries into Mexico?

As has been said before, interesting times ahead!

 

Interesting!

There was also something about the Chinese not devaluing their currency (as they have central control of it) and this action affecting the US debt problem. I didn't understand this bit- Justin?

I'm certainly no expert on this but I think it goes like this:

Eg: with totally bogus numbers..

1 US$ = 1 Yuan (chinese currency)

US borrows 1 million dollars from China.

US owes china 1 million US dollars or 1 million Yuan.

If china devalues their currency like:

1US$ = 0.5 Yuan.

Now $500,000 US dollars = 1 million Yuan, so US only owes $500,000 USD.

So the US Debt would reduce.. Since US owes a lot of its trillions of debt to china, this would make a significant change to the US debt levels and get them partly out of the steaming pile of poo they are in now.

btw, here's a good video that explains the whole mess:

US Debt Crisis - 2012 is only for America - YouTube

 

Nice little summary there Big Dave. The patriotism of the young Chinese is indeed going to be a major element in how things play out over the next few years. I think a lot of 'western observers' think that it's simply a matter of waiting for the 'inevitable overthrow' of the old school powerbrokers in China, but it simply isn't going to happen.

 

Yes Squalo! The Chinese are a very ordered society and have an equally ordered succession plan. There is a little friction with the 'old school' saying some things on the world stage that has some of the new school, Oxford and Yale educated Foreign Affairs officails gasping, but with every new premier they take a step forward.

But the central party still has the final say, so centralised power will be slow, if ever, to decentralise. The west will be waiting a REALLY LONG time for China to play the free market game in its current state!