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you rise a good point here Shadow, but you forgot the main scenario where we can't pay. That is if commodity prices goes down, together with global deflation, we won't be able to pay as our debt doesn't deflate. That is not a big if because at present we have negative inflation in US, UK...

he might just been ahead in his forecast by 5 or more years, markets can be irrational for much longer (or shorter) then exepcted

But foreign own big chunk of australian companies while australian not as much, when you run CAD, specially in the long term, you just get the whole country sold to foreigners, the only way to avoid it is to run massive gdp and productivity increases. This is not happening (and didn't happen for...

Do you have some data shadow? I don't have data on how much banks in major country used the government funding guarantee. Australian banks needed badly the funding, overseas banks had very little need (if nothing), they needed capital to cover the losses on their assets.

yes, if you are a property speculator is a good way, probably many investor look also at the long term and at cash flow like Ausprop is pointing out. I think you are better stay out from short/medium term property investment if you are not a developer or a very experienced speculator

you and me can't change it but politics and markets can change it. It did happen also in Japan 20 years ago when specially in Tokio home prices went absolutly crazy, and i guess everyone was pointing out at a shortage of property in tokio as the main cause of price rises. but that shortage was...

what is worrying me is that more and more expensive housing will just reduce developer availability of money to build new homes. So we risk into getting in a society with a ever expensive homes and a ever shortage of new home build. and that definetly is not a better society either for developer...

Still, I agree with keithj: so, on top of that you get investor and property owners that see what they want to see and you end up getting bubbles everywhere, volatility as high as you can get, specially with debit/credit at huge level a few % move in portfolio get huge imbalances, this...

Sure Shadow, but part of fundmentals is also NFD, like WW keep pointing out its importance, current account, inflation (and interest rates related to it), trade deficit, budget deficit (because of an unsustainable stimulus), home value related to income and gdp, commodity prices, etc. But of...

I am sure shadow is counting on immigrant and population increase, after all, if you get 300k new immigrant/population increase and get an average of 100k debt shortly after they cross the border (to buy a home) that make a new 30 bil$ or 3% of gdp...;)

Probably Australia's banks used the guarantee as much as all the other major countries put together :rolleyes: more then capital flight from australia was to prevent capital stopping to come in. If capital flight from australia is matter of weeks before australia implode like iceland

Interesting post, I agree with that. Not sure what would have happen without the funding guarantee, probably RBA could have stepped in and would have lended more money in exchange of not prime quality assets for a longer term, but most probably australian banks would still have restricted...

Ok, I think I have to change it. I didn't mean they are always wrong, i just mean that if you look at the last century of history central banks (and governments) have been loaded with wrong doing and speacially wrong saying in their statements. I don't personally believe the RBA did that bad...

I am with you on this one: I don't agree with this: So, I agree RBA (but more government), with FED and other central banks got a long history of wrong doing. One of the better central banks is the ECB that just target inflation and CPI, you can clearly see from data (like gold price and core...

what data tell us is that property owner are more in debt now then last year, this is in real term (after you take out inflation). They might struggle less today but for sure they are not better off

f no difference, I am with you...hang on, I pay my gold investment cash, does those land owner own it or banks own a mortgage on it? I think property is a good holding if you are not leveraged and have much debt on it

yes, like you point out few times when you have 3% RBA rate and you drop it to 1% you don't get much of a drop on variable mortgage rate and nothing on fixed rate, so you are not going to see extra buyer coming for further reduction of rates like this year

banks they don't have much capital to sit on at all, they just leverage as much as they want to take more risk: they borrow money from overseas (at an interest and mostly in US$) then lend those money with a spread in australia, so more they lend more they borrow.

that is quite easy to answer that. for sure home prices went up for a higher demand that was introduced by reducing interest rates and FHG (and relative higher rent untill early 2009), offer was lower as there was no need to sell in a bear market as interest rates were lower and more affordable...

yeah, might be right, overnight US hare market plunged (even with the overnight green shots like good manufacturing number and home sales), S&P 500 back below 1000 so the reverse might have started (leading this time was the Baltic dry index first, the Shangai stock market then) I know it is...