All that D&G

[chilliaa]

What has increasingly alarmed me about this site is the dismissive myopia with regards to the unfolding financial tragedy and the naive belief that property investors will be immune to the world wide consequences.

Yadee yahadeee yahaa, this is the exact type of post that i think the moderators are commenting on.
So whats your SOLUTION? if you are going to give us the scaremongering, then give us the SOLUTION to profit from it.
I repeat, so whats your solution????

 

[topcropper]

Wouldn't you...

Nice post.

I should add I'm no where in anyway predicting across the board property drops of 40%, and I've stated before why I think the cheaper end of the property market will hold up. We have even been looking at some cheap high yielding Sydney property.

I do think most people though especially in the cities, are very much unaware of what the commodities bust means for our economy. While the commodities boom continued, Australia was by all rights expected to be largely uneffected by the financial crisis, but now we could be, and probably will be effected more than anyone. And if that's the case, resi property is next in the firing line, and I don't give a stuff what the yields or interest rates are. Australia's wealth will drop dramatically, and it will flow through to everything.

See ya's.

 

[MichaelW]

While the commodities boom continued, Australia was by all rights expected to be largely uneffected by the financial crisis, but now we could be, and probably will be effected more than anyone. And if that's the case, resi property is next in the firing line, and I don't give a stuff what the yields or interest rates are. Australia's wealth will drop dramatically, and it will flow through to everything.

Hi TC,

I can't agree with that logic I'm afraid...

That presumes that our economy is 100% tied to commodities and that GDP is the only thing supporting house prices. I think both those premises are flawed. I've posted elsewhere the make up of GDP and shown how only a fraction of this is driven by commodity exports. The government is already acting to substitute infrastructure spend and consumer consumption for the drop off in commodity exports to maintain GDP in a healthy band. We might even see a quarter or two where momentum carries us negative but that's happened before and certainly isn't the end of the world. In the 90's recession, house prices actually appreciated moderately and the resi property market dynamics are such that this is likely to be repeated in the next couple of years in some areas regardless of whether we suffer a mild recession or not.

I really can't see any significant impact from a drop off in short term commodity exports until the world financial markets get bailed out by sovereign wealth and governments and until China kicks its significant stimulatory engine into gear and the commodity super-cycle re-asserts itself. But then again I am looking 5 years out and am not brave enough to call the next two years whilst financial markets are in turmoil.

But maybe I live in a blinkered world...

Cheers,
Michael

 

[perky29]

Its so hard to know exactly what will happen.
On one hand , we have GM possibly about to go bankrupt - if it does then the unwinding of the CDO's could drive the world into a depression. Good article from Alana Kohler which I am sure some of you have read -
http://www.businessspectator.com.au...tic-enhancement-falls-flat-LNRX3?OpenDocument

But what if, by the end of January , the whole world hasn't fallen down?

Personally, I am trying to sell my Brisbane IP as I don't hold much hope for that market over the next few years (I remember all too well how property behaved between 1993 and 1998 and I see similarities in the area I am invested in).
However I also see opportunity knocking in some parts of the Sydney market.
If I can get that 4.99% int rate for 3 (or 5 years at some point) that Westpac is offering then I will be very pleased - I am currently looking at a
deal in a new and growing market lifestyle development in Western Sydney just off the M7 which I registered for some 5 years ago and now have placed a deposit on a piece of land that will return 8% leaseback for around 3 years ; and feel fairly comfortable doing so as long as Obama keeps bailing out those companies - but this needs to keep happening or else it will all go down the pipe hole.....

 

[MarkB]

While the commodities boom continued, Australia was by all rights expected to be largely uneffected by the financial crisis, but now we could be, and probably will be effected more than anyone.

I can't agree with that logic I'm afraid...

That presumes that our economy is 100% tied to commodities and that GDP is the only thing supporting house prices.

I'm with MW on this one.

The commodities boom has been great for GDP and especially for WA and to a lesser extent Qld, but I don't see how it has done much for the rest of Australia (ergo, I can't see NSW and Vic suffering much from any slowdown).

Also, what I am hearing is that the Chinese economy will slow to around 6-8% GDP growth. Ok, so it isn't 11%, but it is still pretty impressive. Alot of industrialisation will continue to happen in the BRICs of this world and they still need a fair chunk of raw materials to support that.

I'm not saying it won't have an impact, and as I said in the December SS Economic Confidence Survey, I do expect the Australian economy to have a tough 2009, but I don't believe Australia is an iron-ore dependant economy.

 

[Shadow]

I have been challenged to provide proof. The proof is called the fractional reserve banking system and the CDO crisis that has exposed our fiat currencies to the soft financial depression we are now entering.

Well, why didn't you say so before? That proves it then. How could anyone possibly argue with that proof.

I'm totally convinced now, 100%. Sell Sell Sell!!!

 

[ffc1883_1996]

... I'm more interesting in having you ask yourself "am I here to learn" or "am I adding value" ? If the answer to both those questions is "no", then I would suggest that perhaps there are better places for you to spend your time...

I don’t know if Sunfish is learning anything here but, for mine, he is definitely adding value. If he upset the mods, I can’t really see how??

Sunfish - please don't go!

 

[MarkB]

I don’t know if Sunfish is learning anything here but, for mine, he is definitely adding value.

Well the issue I have always had with Sunfish (or Thommo / RichardC) is that he is what I call an outlier.

By that I mean he is prone to extreme views on things. Now, there's nothing wrong with diversity and everyone is entitled to their opinion, but the nature outliers is that they tend to confuse opinion with fact and, even worse, to try to pass off their opinion as fact (it annoys me when anyone tries to do that, but the more extreme the opinion being passed off as fact, the more annoyed I personally get).

Sunfish, who takes a very dim and conspiratorial view of the actions of some of the worlds larger central banks, recently enlightened the forum with this gem of a statement:

And I know, absolutely that the US Fed and the BofE are private entities, and pretty sure that they are answerable only to their shadowy boards which are puppets of the House of Rothschild

That is a very serious accusation to make at any time, but especially so now.

So I did some research and was able to show that niether the Fed nor the BoE are private sector lap dogs. In fact they operate in a manner akin to how the RBA operates (dog on a leash) [the actual exchange is here, btw]

For me, making extremist statements (opinion passed of as fact) that require correction does not add value to this forum.

If he upset the mods, I can’t really see how??

SS is a community of property investors, of which Sunfish apparently does not identify himself as.

Sunfish - please don't go!

Don't worry, he'll be back.

Look for a new nick that hates property and central banks and thinks precious metals are the bees knees.

 

[Piston Broke]

Piston Broke:
Now if you want to explain why current debt loads are no longer serviceable (or will not be serviceable) over the coming few years - that is fine.
s.

I do think employment is headed up considerably, just as inflation and bankruptcies.

How many households can skip 1 weeks pay without defaulting or capitalising interest on their CCs? 2 weeks? 3 weeks?
From what i see not many would last 1 mth with no income, unless they have a drastic change of lifestyle, which of course means less spending, more paying down debt and/or saving.

Why did interest rates in Japan go down to 0.5%
Why did US rate go <2%
Why did UK rates go down 2.3% in 2 mths?
Why are our rates go down at a similar rate?

Do you really think it's because the global recession is not affecting us?
They are lowering rates trying to revive a comatose economy, they are handing out hundreds of billions trying to bailout the banks, not the banks customers.
Why would the RBA who kept saying we are isolated, all of a sudden start dropping interest rates like them if that were really the case?

---

chilliaa, I dont know what solutions you or anyone else here would want us to provide to anybody but ourselves.
Going back a few yrs the posts were pretty much about not over leveraging, keeping LVR low, dont believe prices will never fall, consolidate and be prepared for a downturn after a huge boom.

05-12-2004, 11:04 AM
I see mine as being "Net Wealth"! (and I never have enough of it!!!)
I also see the "dead equity" argument a sales pitch for some one charging fees.
Investors need to be very carful that they are not over commited with debt.
Money supply is still easy and interest rates are still low, but just as it happened many times in the past, a credit squeeze may happen again. Times do seem to be changing.
happy xmas
ps my lvr is ~60% and my net wealth as opposed to my total I use to measure my objectives.

How bout "Thnx for the warning" to some of those old posters
And you did'nt even have to pay $100 for the seat.
Bet you those gurus and experts did'nt warn about the credit crunch...

 

[boz]

I'm with MW on this one.

The commodities boom has been great for GDP and especially for WA and to a lesser extent Qld, but I don't see how it has done much for the rest of Australia (ergo, I can't see NSW and Vic suffering much from any slowdown).

Also, what I am hearing is that the Chinese economy will slow to around 6-8% GDP growth. Ok, so it isn't 11%, but it is still pretty impressive. Alot of industrialisation will continue to happen in the BRICs of this world and they still need a fair chunk of raw materials to support that.

I'm not saying it won't have an impact, and as I said in the December SS Economic Confidence Survey, I do expect the Australian economy to have a tough 2009, but I don't believe Australia is an iron-ore dependant economy.

I am with Topcropper on this one.
Funny that if commodity is 10% of GDP the "bulls" say that is good as mean we have lots of source to keep the GDP up. Then you get the "bear" and I'm with them on this one that point out that commodity (that would include agricolture and meat) is the only thing australia export and the only thing that support everything else. That would have a leverage effect that as bigger as smaller is the percentage of gdp reserved for commodity.
Also to look at it in another perspective:
australia export 100, and import 100 (even if import used to be more then export just put it even to make it simple). This 100 after commodity slump and current contract expire let's say will be set at 50. What would have to be the import set at? I say 50 in these market and credit squeeze. Who think doesn't matter as we'll run trade deficit before and is not that bad. I've got to remember that the flux of money going in and out of australia has to be balanced. Untill few months ago you had Chinese and Japanese pooring money into australia (like buying AUS company and MBS), now this came to a stop (unless they are going to buy RIO or some other company, but for sure they are not buying MBS or banks bond). So I am sure Australia will have the trade in balance sooner then later, that will come with a slump in spending in australia to reduce the goods imported or come through AU$ devaluation, that pretty much bring all overseas import more expensive and people in Australia would afford less of them. This of course will affect businesses, retailers, but even tax and GST revenue.

 

[Sunfish]

Mark, I killed off both Thommo and RichardC myself. They weren't kicked off the site. Besides you've had at least one other nic.

This time is different. I have been asked to leave and as I consider myself civilised I will comply. You can think of these last few posts as parting shots, similar to a drunk being tossed out of a party but having his say over his shoulder on the way out.

Remember Teach a parrot "supply and demand" and you have an economist? You never did forgive me for that did you? (Just bringing it up for old times sake.)

As for research, you have a closed mind and I doubt you could research anything more complex than a new washing machine. I have had supporting evidence for all the opinions I give and have given them if queried. You prefer to make black and white statements and dismiss anyone requesting info on their basies as plebs and never bothered to back up your opinions. It was as if being told by "Pitt St" was all that mattered.

When we were talking global warming you refused to read the articles I thought were sensible on the spurious grounds that they (the authors) were "unqualified" (just your narrow minded opinion). On the matter of the US Fed, I gave you the book title, The Creature of Jekyl Island, a well respected one which described in detail it's gestation and birth. But again you dismissed it as "unworthy" and refused to read it. Now I am not a scholar so I rely on others to do the digging but I tap into a number of "brains" in the US and they all, to a man, accept that the US Fed had it's genesis on Jekyl Is. You are entitled to your opinion but you stand alone, like a pimple on Kylie's bum.

So goodbye, and thanks for the fish.

 

[Francesco]

I am with Topcropper on this one.
Funny that if commodity is 10% of GDP the "bulls" say that is good as mean we have lots of source to keep the GDP up. Then you get the "bear" and I'm with them on this one that point out that commodity (that would include agricolture and meat) is the only thing australia export and the only thing that support everything else. That would have a leverage effect that as bigger as smaller is the percentage of gdp reserved for commodity.
Also to look at it in another perspective:
australia export 100, and import 100 (even if import used to be more then export just put it even to make it simple). This 100 after commodity slump and current contract expire let's say will be set at 50. What would have to be the import set at? I say 50 in these market and credit squeeze. Who think doesn't matter as we'll run trade deficit before and is not that bad. I've got to remember that the flux of money going in and out of australia has to be balanced. Untill few months ago you had Chinese and Japanese pooring money into australia (like buying AUS company and MBS), now this came to a stop (unless they are going to buy RIO or some other company, but for sure they are not buying MBS or banks bond). So I am sure Australia will have the trade in balance sooner then later, that will come with a slump in spending in australia to reduce the goods imported or come through AU$ devaluation, that pretty much bring all overseas import more expensive and people in Australia would afford less of them. This of course will affect businesses, retailers, but even tax and GST revenue.

Hi Boz

I am not siding with TC or MW, but would like to point out that education is the second or third largest export of Australia in recent normal years. (Pardon me for not throwing in some statistics, but I have seen the figures before.) Right now because of devaluation of Aust $ against most other world currencies (including 3rd world countries of South America) there should be optimism that Australia would stand out even more as a cost-effective destination for international students (eg China and India).

Cheers

 

[ffc1883_1996]

... there's nothing wrong with diversity and everyone is entitled to their opinion, but the nature outliers is that they tend to confuse opinion with fact and, even worse, to try to pass off their opinion as fact (it annoys me when anyone tries to do that...

Yes that sort of post is very annoying – like post #54 in this thread. By comparison, Sunfish is moderate.

 

[Sim]

I have been asked to leave

Actually I don't remember asking you to leave. I asked a series of questions to try and work out where you are coming from, and I suggested that you question your own motives for being here.

If you feel that your motives gel with the intent of this site, then you are quite welcome to stay. If I felt there was a strong reason to prevent you posting on this site I would have just banned you already.

 

[nonrecourse]

Nonrecourse,

What I dislike about your posts is the way you talk about one potential outcome as if it is a foregone conclusion. Right down to claiming to know what level the ASX will bottom at and when. The problem is that noone can say for sure what will happen with credit markets over the next two years. I agree wholeheartedly that they've had an unprecedented massive dislocation, but I disagree with your forward projections that this is therefore the end of the world.

An equally probable outcome is that once Obama takes office and starts dealing directly with the royal families in the middle east, then he will be able to trade geopolitical favours for an injection of their massive sovereign wealth. Its not in their interests to see the debt dependent western world enter another depression. A lot of their sovereign wealth is already invested in western asset classes of one form or another.

Just trying to point out that your iron clad future scenario is not quite as iron clad as you make out...

Cheers,
Michael

Michael what I love is taking down Aussie tall poppy cutters. My partner tells me I like to upset people and she is right. Having grown up across the pond I have no problem with saying what is obvious. I guess that is why in the 1970's, when I first arrived I loved the Gary McDonald character Noman Gunstan that so many aussies cringed about. The pieces of toilet paper of the face was particularly poignant.

Lets have a look at what upsets you about me. In early september when the ASX was hovering around 5000 I said it would drop to 3500. Before that I talked about interest rates at 2%, sorry I didn't qualify that I meant the reserve rate. At the moment the "experts" are saying it will drop to 2.75%. At the time there was a lot of sneering because interest rates were heading up. A bit earlier I think around May 2008 I spoke about putting about 5% of your assets into gold bullion. That was before the aussie dollar took a dive to around 68 cents. That part is really still to be played out

Now I'm saying the ASX will fall to 2200 by next october. I'm also on record as saying we will in the next two years see the aussie dollar at 38 cents.

I have not said its the end of the world that's you sitting on the side lines taking pot shots. My postings have shown that I am willing to put my @ss and credibility on the line.

I have never been a wanabee investor I have at least as much as you to lose, maybe more if my scenario plays out in full. The difference is I've taken off the rose coloured glasses and am willing to confront reality.

You may not like my posts but over time your going to factor it into your investment balance because I am going to continue to disappoint you with the accuracy of my calls

 

[MarkB]

I have been asked to leave

Actually I don't remember asking you to leave.

One last extreme opinion passed off as fact.

...you stand alone, like a pimple on Kylie's bum

Oh, the encore!

Kylie is perfect, how dare you spread such lies about her.

 

[topcropper]

I'm with MW on this one.

The commodities boom has been great for GDP and especially for WA and to a lesser extent Qld, but I don't see how it has done much for the rest of Australia (ergo, I can't see NSW and Vic suffering much from any slowdown).

.

Well, that comment has just stunned me. Mining does not contribute much to GDP, that's because it employs so few people. Most of GDP is made up of services. We are a services and consumption based economy that luckily has commodity exports to pay for everything.

The commodities boom lifted the wealth of all Australians, even, and especially the rust belt states and is why this country so outperformed recently.

Even something as simple as growing grain is now not profitable. My small loss from growing a bumper wheat crop is steadily turning into a massive loss as grain prices continue to plunge. This is the fate of all Australia's commodity exporters.



Sit back and watch what happens now then if you think our commodity exports are so unimportant.


See ya's.

 

[MarkB]

The Pocket Guide to the Australian Tax System

According to the tax mix pie chart (pp. 5-6), "Company and petroleum resource rent taxes" were estimated to bring in $76.4 billion in taxes in 2008/09 - or ~24% of the total tax take of the Federal Government

Unfortunately the analysis doesn't break out company tax and petroleum resource taxes (or, if it does, I am missing it), but it does say (pp. 7-8) that for the 2005-6 FY the 0.2% of "incorporated taxpayers" (companies) who had $10m or more in annual income paid 64.5% of total company tax.

I'm not going to go and analyse the income statements of the top companies in Australia to see who paid what taxes, but when looking at the ASX 50 (as at July)we have:

Symbol Company GICS Sector

AGK AGL Energy Limited 55 Utilities
AWC Alumina Limited 15 Materials
AMC Amcor Limited 15 Materials
AMP AMP Limited 40 Financials
ASX ASX Limited 40 Financials
ANZ Australia and New Zealand Banking Group Limited 40 Financials
AXA AXA Asia Pacific Holdings Limited 40 Financials
BNB Babcock & Brown Limited 40 Financials
BHP BHP Billiton Limited 15 Materials
BSL Bluescope Steel Limited 15 Materials
BXB Brambles Industries Limited 20 Industrials
CBA Commonwealth Bank of Australia Limited 40 Financials
CWN Crown Limited 25 Consumer Discretionary
CSL CSL Limited 35 Health Care
FXJ Fairfax Media Limited 25 Consumer Discretionary
FMG Fortescue Metals Group Ltd 15 Materials
FGL Foster's Group Limited 30 Consumer Staples
GMG Goodman Group 40 Financials
GPT GPT Group 40 Financials
IAG Insurance Australia Group Limited 40 Financials
LEI Leighton Holdings Limited 20 Industrials
LLC Lend Lease Corporation Limited 40 Financials
MAP Macquarie Airports 20 Industrials
MQG Macquarie Group Limited 40 Financials
MIG Macquarie Infrastructure Group 20 Industrials
MGR Mirvac Group 40 Financials
NAB National Australia Bank Limited 40 Financials
NCM Newcrest Mining Limited 15 Materials
NWS News Corporation 25 Consumer Discretionary
ORI Orica Limited 15 Materials
ORG Origin Energy Limited 10 Energy
OXR Oxiana Limited 15 Materials
QAN Qantas Airways Limited 20 Industrials
QBE QBE Insurance Group Limited 40 Financials
RIO Rio Tinto Limited 15 Materials
STO Santos Limited 10 Energy
SGB St George Bank Limited 40 Financials
SGP Stockland 40 Financials
SUN Suncorp-Metway Limited 40 Financials
TAH Tabcorp Holdings Limited 25 Consumer Discretionary
TEL Telecom Corporation Of New Zealand Limited 50 Telecommunications Services
TLS Telstra Corporation Limited 50 Telecommunications Services
TOL Toll Holdings Limited 20 Industrials
TCL Transurban Group 20 Industrials
WES Wesfarmers Limited 20 Industrials
WDC Westfield Group 40 Financials
WBC Westpac Banking Corporation Limited 40 Financials
WPL Woodside Petroleum Limited 10 Energy
WOW Woolworths Limited 30 Consumer Staples
WOR Worleyparsons Limited 10 Energy

Yeah there is some miners in there, but the majority aren't miners.

The company (and wider) tax take will be down, transfer payments will be up, and the government will run a deficit (but that is all par for the course for times like this).

TC, I am not saying that commodities producers aren't important to the economy. Clearly they are. What I am saying is that they aren't so important that every 10 year old kid at school should be given a golf ball sized piece of iron ore and told "this is what keeps the world spinning".

 

[evand]

I for one reckon this forum will be a weaker, less enlightened place without the experience and wit of Sunfish.

If there's one thing the forum needs more of its a few straight talking, experienced hard nuts who have been around the block a few times and been there and done that with the t shirt to prove it.

Successful investing is not about what makes you feel good or justifies your previous decisions. In fact that's the fastest way to losses.

Its been good sparring with you Sunfish. If you come back with another name i'll be the first to say hi.

So goodbye, and thanks for the fish.

 

[boz]

The Pocket Guide to the Australian Tax System
TC, I am not saying that commodities producers aren't important to the economy. Clearly they are. What I am saying is that they aren't so important that every 10 year old kid at school should be given a golf ball sized piece of iron ore and told "this is what keeps the world spinning".

You've brought up a very good point:
I would give a 10 year a ball of iron ore, one of coal and on of gold (little of course) and together with education are by far the main thing that keep australia going