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It makes sense to me if you separate the property market into rentals and owner occupiers. Owner occupiers won't be able to pay as much because they can't borrow as much, so prices go down. However, if they can't buy they will have to rent, and given the undersupply rents go up. Alex

To put it into perspective, that was probably the house showing the BIGGEST loss. It might have been 'purchased' at a very inflated price back then, possibly to defraud. You can't assume that the whole population is like that extreme sample. I've certainly seen properties on the market for...

I agree. We'll have recessions. And booms. And busts. And more booms. And more busts. They'll all look different from each other, but in the end, the one thing that they will all do is END. Booms end, so do busts. As investors we just have to make sure we survive the busts to take advantage of...

I think they're saying the Fed might be close to its rate-lowering cycle. If the current bear RALLY (i.e. market coming off its lows) is based on the Fed continuing to cut rates, and the Fed says it will stop cutting rates, shares will go down again. Note it's saying the bear RALLY will reverse...

Basically, less money available to lend. If lenders can't securitise loans, they can't keep lending. Alex

I'm going to plan for a recession but not armageddon. For me, the opportunity cost of preparing for what you're describing would be way too high given that it's not a certainty that it'll happen. If it does happen, too bad for me. I'll have to declare bankruptcy and start from scratch. Alex

The Fed could have just LOANED Bear 30b if they wanted to just bail it out. Instead it tried, at least, to lighten the 'bailout' aspect, and brought JPM in to buy it instead. JPM is up for the first billion of losses. I don't deny there is a bailout aspect, but the difference is in what they're...

In any case, there are many structural and cultural differences between us and the Japanese. The Japanese crash was prolonged partly by the fact that the govt wouldn't let companies go bust by directing loans to banks to keep zombie companies afloat. That saved a lot of pain in terms of...

In that case, there's no point discussing it, is there? We'll just have to see what happens. But if it comes back in 3-5 years, you would just call it a dead cat bounce on the way to hell, and I wouldn't be able to convince you otherwise. In any case, 3 years is too short. If we have falling...

With all due respect to Soros, I wonder what he said during the Asian Crisis, the 70s recession, the 80s bust? As an example, here is what Soros said in 98: http://www.wsws.org/news/1998/dec1998/soro-d22.shtml Now, Russia DID default. Asia DID have a horrible recession which hurt a lot of...

We discussed this in another thread. If you assume that property tripled in this last period and 25% of those gains are not sustainable, then we're in for about 17% drop in nominal prices. That's no big surprise in a recession. Alex

PPP isn't as relevant when you're talking about the world economy, surely. I mean, if the US contracts 5%, the other countries would have to make up the DOLLAR figure of the US contraction to even things out. 5% US contraction won't be offset by a 5% expansion in China. Alex

That's not my understanding of my loan. My understanding is that I have a 25year loan with 5 years fixed interest only payments. After the 5 year period, it automatically reverts to 20 years of variable rate payments, probably P&I. You don't have to refinance at all. Alex

The increase in cash reserves is to allow for a REcession. Less lending, possibly vacancies, etc. If we get to the point where major banks fail and depositors lose out, there really isn't much that I can do unless I'm willing to sell everything and keep gold in my garage. How does one...

This is really the crux of it for me. If I sell everything, I run the risk of the world NOT coming to an end and I miss out on the opportunities. If I hold on (though I am preparing more cash on hand and so on) I run the risk of the above scenario. BUT for me, I'm willing to risk going bankrupt...

Then you've sold everything, or at least keep enough cash on hand to repay all of your loans? I'm just not convinced it'll get that bad, but that of course is only my opinion. In any case, at my age and stage of wealth building, it's actually risky to prepare for a Depression like bust. Even...

Yes, but there is a big difference between being unable to refinance (including, for example, going off an IO period and being unable to refinance into a new IO period) and banks calling in their loans even if your payments are current. The former is bad: the latter is fatal. I agree with you...

No, it's not going to go away soon. But on the other hand, it WILL work itself out eventually. Positive about the long term, negative about the short term but realistic about my own abilities. I'm reading a lot of articles where people say this is the worst we've had since the depression. e.g...

I'm not that optimistic about the short term or even the medium term. I am, however, optimistic that these current problems will eventually be resolved. Kenneth, I don't think it's because the Australian government is all that good. If you believed that, shouldn't you be panicking because Howard...

Sash, you don't believe there IS a wound at all. Alex