Asset Price Meltdown Hypothesis

[see_change]

The AMA IMHO doesn't have a long shelf life without significant compromise.

When we reach the stage of regional areas with insufficient medical care the government WILL step in to break that monopoly. It will only take a few media-publicised deaths to bring down the AMA...after all doctors have built an image of themselves in the community as caring hardworking individuals - and at the same time are sometimes seen as incredibly wealthy and in some senses arrogant....a few deaths would sway public attitude towards the arrogant viewpointand away from the caring.

Either we'll see it much easier for foreign doctors to get registered - on the basis that they practice where the government tells them to for the first five years OR we'll see that conscription-based rotation by doctors governed by the Federal Government.

We even have a doctor shortage in Canberra ATM, and the doctors here are well over the median age of doctors in Sydney/Melbourne.

It's simply an area that MUST be addressed - particularly with the older, more likely to need care people flocking out of major metros atm

My two cents.

Cheers,

Aceyducey

Acey , it's nice to think that that would happen , but I think you over estimate the social consciousness of Doctors as a whole.

They are a self interest group like any other such group in the community. In order to get into medicine you don't have to pass any tests in ethics or social awareness. All you need to do is to work hard enough and be smart enough to get the marks at HSC to get into Medicine.

Obviously there are some very social aware / competent Doctors , but as a whole they are no better or no worse than most other group in the community. I think the track record of the Doctors on this forum would bear testement to that . From my year I am aware of three who have spent time in Jail.

See Change

 

[geoffw]

I think the track record of the Doctors on this forum would bear testement to that . From my year I am aware of three who have spent time in Jail.

See Change

Three doctors on this forum who have spent time in jail?

I'm only aware of two doctors (well, one current) on the forum. Does that mean you've spent time in jail?

 

[geoffw]

Peter,

Money is generated because people continue to produce things.

I go to work, and I produce something which my employer finds of value. I get paid.

OK, in a place like Coffs, there's a lot less active production. Many people there have spent most of their lives "adding value"- that's why it now looks as if the local economy is just exchanging money.

But the people supplying the services are doing the value add. The shops, the stores, the fast food places- all of these have people working, and adding value to the community as a whole. The things the people are buying have to be produced by someone- farmers, manufacturers and the like. That's what drives the economy.

 

[Peter Parker]

OK, in a place like Coffs, there's a lot less active production. Many people there have spent most of their lives "adding value"- that's why it now looks as if the local economy is just exchanging money.

But the people supplying the services are doing the value add. The shops, the stores, the fast food places- all of these have people working, and adding value to the community as a whole. The things the people are buying have to be produced by someone- farmers, manufacturers and the like. That's what drives the economy.

Assessing economic activity is a funny thing.

Thus if we do our neighbours washing (for a charge), the economy grows as services are transferred from the private (household) to the public (economic) sphere, even though the amount of work that gets done remains unchanged*.

* it could actually be slightly less as the less well off can't afford to do their washing as frequenty because they have to pay. Activities that are necessary but can't be paid for thus don't get done. However if washing was done less frequently, you can expect some knock-on effects, eg increased sales for purveyors of undergarments!

If all owner occupiers sold their homes and rented to their neighbour, again there would be greater economic activity in industries such as property management and home maintenance. However assuming constant incomes, this would be at the detriment of other industries (eating out, pokies, clothes, etc).

So much economics seems to be arbitrary. What is regarded as activity or growth is often just rebadging of activities that were previously performed without payment. Thus I am always skeptical of claims that X will create Y jobs or Z will save money.

Peter

 

[Peter 14.7]

Do we agree

Hi Spiderman & Geoff

I am enjoying our debate but are we are starting to agree and we don't know it.

So I will put the alternate case that we could have an meltdown driven by BB.

I assume the fear is BB retire and want their super. It is in shares, so shares are sold and if there is not enough buyers, supply exceeds demand and the share price drops.

But what will BB do with their super cash? Ok if they invest overseas Aust will suffer. But that on mass is very unlikely and fraught with exchange risk.

So, BB have 3 investment options. Shares again, Property, or Cash.

If they swamp the banks with cash it is because they are not buying anything. The ecomony slows so the RBA lowers rates and because the banks are cashed up they offer very low loan rates which encourages business to build aged scooters to serve the once mobile BB.

If they swamp property again supply exceeds demand and rents drop and lessees enjoy lower cost of living.

IF the swamp shares they are back to the start again.

As I see it the money goes around hence the law. Perhaps if we not in agreement can you list an example where the money law fails?

Peter 147

Any comment from our wise Pitt St.

 

[Aceyducey]

OK - where does baby boomer super money go?

It gets spent on lifestyle.....not investments

Most baby boomers have negligible share & IP assets asides from super. I can't see that changing a great deal over the next twenty years.

The risk is when lots of them sell up simultaneously (unlikely)....it is likely to take the next 20-30 years for babyboomers to filter out of the market - that's not an amazingly big hump in any one year, month or day over the current situation....and if they sell, they have to do something with their money!

Some asset prices will fluctuate - however provided Australia is diligently matching immigration to keep the population on a slow upward incline, the market should be able to absorb it.

Cheers,

Aceyducey

 

[Peter 14.7]

OK - where does baby boomer super money go?

It gets spent on lifestyle.....not investments

Most baby boomers have negligible share & IP assets asides from super. I can't see that changing a great deal over the next twenty years.

The risk is when lots of them sell up simultaneously (unlikely)....it is likely to take the next 20-30 years for babyboomers to filter out of the market - that's not an amazingly big hump in any one year, month or day over the current situation....and if they sell, they have to do something with their money!

Some asset prices will fluctuate - however provided Australia is diligently matching immigration to keep the population on a slow upward incline, the market should be able to absorb it.

Cheers,

Aceyducey

Agree totally. In fact if you retire at 65 and the average life is 73 years long you're only got 8 years to blow it.

I acknowedge some retire early and some live longer.
But acey is right. The BB will filter out and others filter in.

Invest in boat builders or oil to run boats I say.

Peter 147

 

[noddy]

In all the property presentations, I see the 90% of retirees will depend on the pension. With the workers/retirees ration dropping from 20-1 ten years ago to 5-1 now and expected 1-1 in ten years time, maybe we should be looking at the 70% who we think can fund themselves.

If the govt has insufficient money for the pension, then we will see further extention of working life, part-time access to super, and then the inevitable, sell the family home as a reverse mortgage to fund day-to-day living. The Commonwealth Bank has already started this trend after getting the higher incomed people all spent with "equity-mate", they can see the BB's needing the reverse mortagege as becoming a standard plank in retirement and have developed the product accordingly.

The doughnut theory of the baby boom is that a small number of wealthy retirees will be located in the inner suburbs, the outer-outer suburbs populated by people unable to afford the middle or inner suburbs; and finaly, the middle suburbs having a price collapse as the baby boomers who are owner-occupied living in $500K properties find no buyers and the price drops to the outer-suburbs prices to bring the buyers back.

Melbourne with their containment strategy, although pushing up land in the short-term, may be less likely to be impacted. Perth on the otherhand, spreading as far out as possible, may find a lack of people wanting to live in the increasingly owner-occupied vacant middle ring.

It will be interisting to see the owner-occupier vs invester ratios over the next 5-10 years.

Noddy

 

[geoffw]

I've heard one theory that, as the baby boomers start to realise that they have not provided well for their retirement (as a BB myself, I realised this some years ago myself, but did not see a way out)- they start to invest ion property in a big way- possibly leading to the3 next boom cycle being much bigger than this one.

But then, as the reality of supply and demand hits home, it could lead to a huge bust cycle.

I think we've seen the effects of an investor led boom so far- a similar cycle to this one, but magnified seems at least plausible.