Do you agree with Robert Kiyosaki's prediction? GFC in 2016....

I'm bemused at how you can rationalise illogical conclusions. Somewhat of a circular argument.

Pretty sure you are the one who misinterpreted the original statement regarding pessimists vs optimists, Freckle. The comment by Paul stated that half of optimists and half of pessimists get it wrong at any point in time - so he never said pessimists do not make money which is how you interpreted his message.

You then went on to admit that you're a "realist". A pessimist always sees the worst in things whilst a realist sees things for what they are and not what they're "supposed to be" or "could be". There IS a difference between the two and whilst I am a realist, I would never consider myself a pessimist.
 
It depends how things play out.

In the US, nothing has changed. Housing, stocks etc have been re-inflated by excess money supply, but the 20 trillion debt problem has not gone away. So at some point either they print money again,- which results in hyperinflation, devaluing of US$, reduction of consumer living standards - or they fall on their sword. This could happen as soon as 2016. Stocks have surpassed 2008 highs, and what's changed fundamentally? Not much.

In Europe, things are monumentally ****ed. I don't even know where to start but most European countries are entering a lost decade, worse than Japan's, because they are less productive and lazy people. And sorry to be politically incorrect but you need to call a spade for a spade. They will continue to spiral into oblivion for the next 10 years, except Germany.

I am more optimistic about Japan than Europe, because they are innovative, productive and they work hard. Unfortunately they've become a welfare state like most first world countries, but they should get through to 2020 as they're already pitifully cheap (yen is now trading at 120 vs USD, and properties are so cheap I almost spewed when I heard about the yields and replacement costs when I was there earlier this year).

On China - the most relevant country for Australia. Despite all this hoo-hah about China's crash, it is still the strongest country in the world. It's quite simple. When you hold a lot of cash and no debt, it doesn't matter about the intrinsics, you just win. It's like anything. If there was an Australian property crash today, anyone holding all cash and equity will win and swoop on the dead caracases (USA, Europe, Japan).

How does this affect Australia? Australia should continue to be buttressed to some extent from any fallout by China (and to a lesser extent Korea, India, Taiwan and even Japan). Energy trade in coal should continue. LNG should pick up. Agri will grow after the FTA (benefits east coast). And education and tourism will help on Sydney, Melb, Gold Coast. The problem is, is this government and its useless ATO (which specialises in targeting individuals rather than big corporates) able to clip the ticket? If Mobil and PetroChina are able to sell billions of dollars of LNG but siphon all the profits to the Bahamas, QLD is monumentally in *** creek for good. Don't forget there'll be a massive rise in unemployment once these facilities are built, because while you may need 5000 people to build something, you only need 500 to operate it.

So if this translatse to falling income, falling tax revenues decreasing dollar (so we are becomming poorer), BUT the RBA responds by cutting rates twice-thrice, leading to another housing boom (from already very strong prices), we are certainly heading for a crash in 2016/2017. Because the fundamentals are too out of whack. I was never concerned about house prices because everyone had good jobs, everyone got paid well, and that's why we have high prices. But when everyone is poor, income is falling, and prices are still growing because of monetary policy tinkering, that's when you know we're heading up very very big ***** creek. Best thing to do at the time is hold RMB technology shares and gold bars.
 
Thanks. Thinking about things like this reminds me of what Buffett says. When the tide goes out, we find out who's been swimming naked.

And I must profess, I'm not in that enviable a position myself from a debt perspective. Of course, I could always cash out and go "hey I'm done". But then again, we're all greedy, no guts no glory, and as long as you appreciate the risk you take, make an assessment on when thing's may or may not turn etc, then that's that. Life's all a game anyway.
 
It depends how things play out.

In the US, nothing has changed. Housing, stocks etc have been re-inflated by excess money supply, but the 20 trillion debt problem has not gone away. So at some point either they print money again,- which results in hyperinflation, devaluing of US$, reduction of consumer living standards - or they fall on their sword. This could happen as soon as 2016. Stocks have surpassed 2008 highs, and what's changed fundamentally? Not much.

In Europe, things are monumentally ****ed. I don't even know where to start but most European countries are entering a lost decade, worse than Japan's, because they are less productive and lazy people. And sorry to be politically incorrect but you need to call a spade for a spade. They will continue to spiral into oblivion for the next 10 years, except Germany.

I am more optimistic about Japan than Europe, because they are innovative, productive and they work hard. Unfortunately they've become a welfare state like most first world countries, but they should get through to 2020 as they're already pitifully cheap (yen is now trading at 120 vs USD, and properties are so cheap I almost spewed when I heard about the yields and replacement costs when I was there earlier this year).

On China - the most relevant country for Australia. Despite all this hoo-hah about China's crash, it is still the strongest country in the world. It's quite simple. When you hold a lot of cash and no debt, it doesn't matter about the intrinsics, you just win. It's like anything. If there was an Australian property crash today, anyone holding all cash and equity will win and swoop on the dead caracases (USA, Europe, Japan).

How does this affect Australia? Australia should continue to be buttressed to some extent from any fallout by China (and to a lesser extent Korea, India, Taiwan and even Japan). Energy trade in coal should continue. LNG should pick up. Agri will grow after the FTA (benefits east coast). And education and tourism will help on Sydney, Melb, Gold Coast. The problem is, is this government and its useless ATO (which specialises in targeting individuals rather than big corporates) able to clip the ticket? If Mobil and PetroChina are able to sell billions of dollars of LNG but siphon all the profits to the Bahamas, QLD is monumentally in *** creek for good. Don't forget there'll be a massive rise in unemployment once these facilities are built, because while you may need 5000 people to build something, you only need 500 to operate it.

So if this translatse to falling income, falling tax revenues decreasing dollar (so we are becomming poorer), BUT the RBA responds by cutting rates twice-thrice, leading to another housing boom (from already very strong prices), we are certainly heading for a crash in 2016/2017. Because the fundamentals are too out of whack. I was never concerned about house prices because everyone had good jobs, everyone got paid well, and that's why we have high prices. But when everyone is poor, income is falling, and prices are still growing because of monetary policy tinkering, that's when you know we're heading up very very big ***** creek. Best thing to do at the time is hold RMB technology shares and gold bars.

China is in all sorts of trouble, anything they publish in terms of growth etc is all fabricated. If you look at commodity price's every single one is down this is the reason of no demand. You can argue oil is down for political reasons but what about the rest of the market?

Main problem is little to no growth around the world. All the investors who experienced loses in the market during GFC will soon pull out of the market because they don't want the same thing to be repeated, when that happens guess what happens next?

IMO The RBA is stuck and has no idea what it will do next. You cut the rates you have another property boom, you lift the rates you have people in all sorts of trouble because most are in huge debt at low rates.

Govt can stop overseas buyers maybe that will fix it up, but the government won't do that because it gets free money, more buyers more stamp duty, more loans.

Recession is inevitable in 16/17/18 or as early as the end of 15.
 
Thanks. Thinking about things like this reminds me of what Buffett says. When the tide goes out, we find out who's been swimming naked.

And I must profess, I'm not in that enviable a position myself from a debt perspective. Of course, I could always cash out and go "hey I'm done". But then again, we're all greedy, no guts no glory, and as long as you appreciate the risk you take, make an assessment on when thing's may or may not turn etc, then that's that. Life's all a game anyway.

Agree.
We still have a lot of debt.
Yesterday, I just set in motion to pay off another mortgage 7 yrs early, and still keep our monthly expenses the same.So when that mortgage comes up for renewal in 4.5 years, it is paid

Either way..we will survive
 
China is in all sorts of trouble, anything they publish in terms of growth etc is all fabricated. If you look at commodity price's every single one is down this is the reason of no demand. You can argue oil is down for political reasons but what about the rest of the market?

Main problem is little to no growth around the world. All the investors who experienced loses in the market during GFC will soon pull out of the market because they don't want the same thing to be repeated, when that happens guess what happens next?

IMO The RBA is stuck and has no idea what it will do next. You cut the rates you have another property boom, you lift the rates you have people in all sorts of trouble because most are in huge debt at low rates.

Govt can stop overseas buyers maybe that will fix it up, but the government won't do that because it gets free money, more buyers more stamp duty, more loans.

Recession is inevitable in 16/17/18 or as early as the end of 15.

Your entire post about China is incoherent. I have no idea what you are talking about.

Anyway the best thing to do re Australian property is to stress test. If you can pay 18 months interest without rent or a job and withstand a 200 bps rise, you should be fine.
 
Your entire post about China is incoherent. I have no idea what you are talking about.

Anyway the best thing to do re Australian property is to stress test. If you can pay 18 months interest without rent or a job and withstand a 200 bps rise, you should be fine.

Do you think all the data the Chinese govt releases about its economy are all true ? They lie and fabricate all the important figures.

China is doing great when you compare them with say europe or the states. What China is trying to do is be the superpower of the world by manipulating everything and trying to make the YUAN the reserve currency but in reality they are just dreaming.

GDP Per Capita is $7k
 
A bit more info here on RK predictions

'Rich Dad' author Robert Kiyosaki warns investors to avoid real estate

Author and entrepreneur Robert Kiyosaki has warned investors not to touch real estate because foreign investment is over-inflating the market.

Real estate was one investment Australians should not be making yet.

"It will come down," he said. "It's not a real economy. Whenever you see too much money in one sector, you have a bubble.

"Property prices are going up, but are wages going up to reflect that? No. The average Australian is not getting richer, the whole economy is shaking.
"The poor and middle class are hurting and you have a speculative economy where [international investors] are running to buy."

Kiyosaki urged Australians to invest in gold or oil, where prices were falling.
"I would just sit back and wait for the crash," he said. "Find somewhere else where the money is safer."

Kiyosaki said it would be a US currency crash, created by the printing of $US6.5 trillion ($7.6 trillion) since 2008 without gold backing and possibly triggered by the deal between Russia and China to do business, but not in US dollars.
 
Robert Kiyosaki as quoted by Redwing ~ "a US currency crash, created by the printing of $US6.5 trillion ($7.6 trillion) since 2008 without gold backing... "

He's only 43 years too late on the news that the gold standard has been broken.

On 15 August 1971, the United States unilaterally terminated convertibility of the US dollar to gold, effectively bringing the Bretton Woods system to an end and rendering the dollar a fiat currency.

Quoted from wikipedia, but here is the original source.
 
On China - the most relevant country for Australia. Despite all this hoo-hah about China's crash, it is still the strongest country in the world. It's quite simple. When you hold a lot of cash and no debt, it doesn't matter about the intrinsics, you just win.

According to:

http://www.nationaldebtclocks.org/debtclock/china

China's debt to GDP ratio is circa 62% and from other sources that I can't be bothered finding now it is still growing fast as Chinese consumers are notorious savers so government has to do all the spending. It's an unbalanced economy, not to mention an unsustainable political system...

The idea that China has a lot of cash and no debt doesn't hold any water at all...
 
According to:

http://www.nationaldebtclocks.org/debtclock/china

China's debt to GDP ratio is circa 62% and from other sources that I can't be bothered finding now it is still growing fast as Chinese consumers are notorious savers so government has to do all the spending. It's an unbalanced economy, not to mention an unsustainable political system...

The idea that China has a lot of cash and no debt doesn't hold any water at all...

It's no secret the chinese government lies in order to look good and look as if they are booming. They have slowed down so has manufacturing.
 
According to:

http://www.nationaldebtclocks.org/debtclock/china

The idea that China has a lot of cash and no debt doesn't hold any water at all...

Hmm........... China gross debt is around 22% of GDP, compared to:

- Australia: 27%
- UK: 90%
- USA: 106%

http://en.wikipedia.org/wiki/List_of_countries_by_public_debt

This is gross debt and disregards the US$4.0 trillion of foreign reserves (read, cash) that they hold. This is around 40% of their GDP. It's like saying I have $5m property loans, but I have $10m cash in my offset account. We used to have more cash than debt too, until someone decided to build this thing called an NBN which I still don't have access to despite living within 8km of Melbourne CBD.

http://en.wikipedia.org/wiki/List_of_countries_by_foreign-exchange_reserves
 
Hmm........... China gross debt is around 22% of GDP, compared to:

- Australia: 27%
- UK: 90%
- USA: 106%

http://en.wikipedia.org/wiki/List_of_countries_by_public_debt

This is gross debt and disregards the US$4.0 trillion of foreign reserves (read, cash) that they hold. This is around 40% of their GDP. It's like saying I have $5m property loans, but I have $10m cash in my offset account. We used to have more cash than debt too, until someone decided to build this thing called an NBN which I still don't have access to despite living within 8km of Melbourne CBD.

http://en.wikipedia.org/wiki/List_of_countries_by_foreign-exchange_reserves

That's a 2012 figure and doesn't include all the debt of their state owned corporations, a major instrument of govt policy in China.

A better insight IMO can be gained here:

http://www.economist.com/news/leade...conomy-it-risks-zombifying-countrys-financial
 
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