2003 BOOM

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From: Mike TheBloodyIdiot


My keyboard is still warm from typig that I can actually cancel 2003 BOOM prediction due to US share crisis.

Well, read this:

http://www.finance.news.com.au/common/story_page/0,4057,4705231%255E462,00.html

"According to New York broker HD Brous & Co, the 1929 mania saw stock exchange turnover in dollar volume equivalent to 130 per cent of US gross domestic product. In 2000, it was more than 300 per cent of the GDP figure.

Even with the lower prices and burned fingers, in June 2002, $US1.91 was spent on share trading for every $US1 used to buy goods and services."

With those facts in mind it looks almost certain that Dow belongs to 5000 if not less.

In other words, if Governments will not come up with some kind of miracle solution in the next couple of months, the ghost of the new Great Depression have a real chance to materialise.

It is still a bit early days, but if Dow picks up speed falling, then I would be thinking about totally new course of action (even before it hits 7000).

Cheers,

Mike-TBI
 
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Reply: 1
From: Alan Hill


Fascinating times indeed!

I read an article on the weekend that pondered the question of how soon this shakeup will impact on the 'real economy'(their term, not mine). ie. how soon these stockmarket changes will impact on such things as Retail Sales figures etc. NB. I believe the US's last Retail figures were still slightly up although 'sentiment' was down.

The implications on such things as interest rates etc. certainly demonstrate how 'Property Investors' need to keep a close eye on the performance of other major investment classes too.



:)
 
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Reply: 2
From: Glenn Mott


To a large extent, I feel that our sharemarket will always be affected by what is going on in America and Europe. However, we can smooth the bumps by removing artificial stimulation of share and property markets by removing the tax deduction allowable for the losses incurred when borrowing to invest, and not have buying inducements like the First Home Buyers Scheme.

This would negate the need for the Reserve Bank to raise or lower interest rates as dramatically as it has done in the past. While the educated and those able to forecast what will happen in financial markets 2-3 years in advance will always be OK, a lot of people will not.

Glenn
 
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Reply: 2.1
From: Terry Mc


Hi, Glenn.
Should we be looking at the FHOG
scheme as our taxes being used to
subsidise the residential builders, rather
than an inducement for people to buy?
Is this scheme poor economics?
Terry Mc
 
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Reply: 2.1.1
From: Glenn Mott


Terry,

I think the FHOG has done exactly what you suggest, enhance the flow of money into building companies. Unfortunately, the mindset of a lot of people buying houses is:

a. House cost $150,000 - too expensive
b. House cost 175,000 wih $7,000 rebate - fantastic!!!

Glenn.
 
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