Sure, but compare the GBP150b to GDP, or even govt guilts on issue - its an amazingly large ratio!!
Fiscal literacy and surviving the GFC
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Sure, but compare the GBP150b to GDP, or even govt guilts on issue - its an amazingly large ratio!!
But one source of lending hasn't been removed or reduced. Rates are down. Domestic bank deposits are up, as people pay down debt, reduce consumption, and save more.
These facts lead to banks having higher reserves to lend against at lower rates.
Therefore, why is quantitative easing (central bank prints money and credits to govt or private banks, who give central bank IOU in return) likely to succeed in stimulating borrowing, when the above hasn't?
I'll tell you why not.
Because the problem isn't a lack of credit, but elevated risk aversion by borrowers, in the face of greater uncertainty in measuring risk/reward of borrowing.
Printing money is an attempt by govt to furtively con the market into taking on the higher risk (debt) of valuing asset prices at current levels.....when the market is actually saying asset prices are worth less.
And let's remember how asset prices got to where they are now. By central banks keeping rates too low for too long.
Simply, going into deeper debt is not the solution for a problem created by too much debt.
Gold in these uncertain times as a hedge is a prudent move. A maximum 5% of your equity in properties is for us the ideal scenario. If you have an SMSF with an income stream from your properties then this is another option to ensure that you remain solvent. Because the gold is purchased using super income that is generated in the fund there is no risk of a trustee if you went bankrupt being able to claw this back.
you talk like folk have $10mil plus to play around with - or unless they do, they shouldn't invest.
5% of my SMSF portfolio is $3000. i could get over 2500 properties in detroit!!!
5% of my SMSF portfolio is $3000. i could get over 2500 properties in detroit!!!
Agreed, WW.
Governments helicopter drops may take a long time to work to rebuild consumer confidence (10+ years in Japan) due to a severe drop in consumer sentiments & spending.
Banks in theory can re-lend depositors money for profit, but many of them would choose to play safe because they still don't know the real health of their own books.
Many aspects of the global financial melt down has not played out fully yet, such as the extent for bad debt write down provisions, consumer loans, commercial RE and bonds.
It disturbs me to think my world has been turned upside down over the last 18months over nothing more than a 'complication'.
Has anyone told Obama
Funny how maximum damage equates to a minimum complication. Not only did they not see the black swan event that evolved they also are oblivious to the consequences. Fair enough not being able to predict the black swan event. The key now is to build an investment model that is robust enough so that subsequent ramifications of the banking fallout do not equate into a series of personal black swan events.
The problem is that people confuse speculation with investing and this is exposes them to huge losses beyond what their defective investment model projected.
Gold makes sense given people like Dr Gary Schilling argues for 10+ years of Deflation (~3% pa) similar to Japan. The sharemarket may rebound post 2009 but it would be brief since all economic fundamentals for a sustained change are not there, combined with dropped consumer spending and deleveraging.
Gold would help hold the purchasing power in a deflationary environment.
Financial shock waves continue as governments dither
Shuffling the deck chairs on the titanic. Anyone for funny fiat money?
http://www.telegraph.co.uk/finance/...of-dollars-in-global-quantitative-easing.html
Shuffling the deck chairs on the titanic. Anyone for funny fiat money?
http://www.telegraph.co.uk/finance/...of-dollars-in-global-quantitative-easing.html
Hi All
1. It is funny that K Rudd was singled out by Obama that someone did something to stimulate the economy.
2. Obama summoned K Rudd to whitehouse next week to talk.
3. Obama talked to a Chinese Foreign Minister in Whitehouse (normally a US president would not do things like this). Hillary Clinton went to China to ask China to continue to buy their bonds.
3 When the Chinese premier doubted the US investment security, the whole US government came out to say how good the US was.... The US is no longer the super power US.
4. The US is printing the green back at max speed. I reckon next year we will possibly see the worst in US. I can not see how the US is going to save the world this time. The world used to grow on the high US currency and borrowed living. Now people realise how big the hole in US is.
5. I reckon economies in all industrilised countries are dead - Japan, US, UK, France, German. I do not include Australia because I never believe we are industrilised country.
1. It is funny that K Rudd was singled out by Obama that someone did something to stimulate the economy.
2. Obama summoned K Rudd to whitehouse next week to talk.
3. Obama talked to a Chinese Foreign Minister in Whitehouse (normally a US president would not do things like this). Hillary Clinton went to China to ask China to continue to buy their bonds.
3 When the Chinese premier doubted the US investment security, the whole US government came out to say how good the US was.... The US is no longer the super power US.
4. The US is printing the green back at max speed. I reckon next year we will possibly see the worst in US. I can not see how the US is going to save the world this time. The world used to grow on the high US currency and borrowed living. Now people realise how big the hole in US is.
5. I reckon economies in all industrilised countries are dead - Japan, US, UK, France, German. I do not include Australia because I never believe we are industrilised country.
well considered response Chilli. Maybe you aren't a troll after all.
agree with that. unless japan beats them.
bummer Portugal, Italy, Austria, Greece, Spain outsourced their currency management. No chance of them applying quantitative easing or otherwise manipulating their currency.
AIG executive incentive plan
I don't understand why the Yanks are so upset with paying out $165 million in bonuses to all the executives, no sweat. Issue all the executives with partially paid shares in AIG backdated to July 2007 share value with an excise date of July 2009.
That should give congress enough time to pull the rug and bankrupt AIG which the government then steps in grabs all the assets and liabilities and guarantess the linked insurers.
The government then demands full payment for the partially paid shares from the executives and on non payment jails them for twenty years each. As part of their rehabilitation they work off their 20 year jail sentances in AIG recovering all the funds that they have embezelled from the US taxpayer
I don't understand why the Yanks are so upset with paying out $165 million in bonuses to all the executives, no sweat. Issue all the executives with partially paid shares in AIG backdated to July 2007 share value with an excise date of July 2009.
That should give congress enough time to pull the rug and bankrupt AIG which the government then steps in grabs all the assets and liabilities and guarantess the linked insurers.
The government then demands full payment for the partially paid shares from the executives and on non payment jails them for twenty years each. As part of their rehabilitation they work off their 20 year jail sentances in AIG recovering all the funds that they have embezelled from the US taxpayer
Who cares less the way it pans out in the US, Australia is very different to the US,you only have to look at what is paided out in any Aussie company to their high levelI don't understand why the Yanks are so upset with paying out $165 million in bonuses to all the executives, no sweat. Issue all the executives with partially paid shares in AIG backdated to July 2007 share value with an excise date of July 2009.
That should give congress enough time to pull the rug and bankrupt AIG which the government then steps in grabs all the assets and liabilities and guarantess the linked insurers.
The government then demands full payment for the partially paid shares from the executives and on non payment jails them for twenty years each. As part of their rehabilitation they work off their 20 year jail sentances in AIG recovering all the funds that they have embezelled from the US taxpayer
management in share holder funded free for alls,so much for the asx levels of 2200,nothing like crossing the freeway blindfolded..willair..
NR you often talk about the GFC as a black swan event that has and is changing the face of economies worldwide but I would like opinions as to whether the GFC is not the black swan event in itself rather that the repecussions of it may be.
The point I am trying to make here is the black swan event may well not be the crisis itself but the movement of thought after it.
If we are to invest and build wealth for the future then a dynamic change in thinking toward risk/reward may well bring about fundamental changes in the flow of liquidity to different asset classes; ones that were previously unpopular because of returns or were previously thought of as high risk.
I am trying to think beyond populist thinking here ie. lets just compare it to x recession or the depression and extrapolate from there and say well, crime will go up so the security industry is good or fear may bring about disease/war and invest in those assest classes for the short term.
From my perspective issues such as the environment could trump the doc com boom. Environmental fear could push electricity and oil prices to new highs pushing returns in renewables into favourable territory for the long term.
There is a lot of resistance toward EFTs ATM for the pain they will cause but will it reform our investing future? There will already be enough pain paying for the Rudd bubble bonus to keep the dream alive.
If there is a fundamental change in peoples thinking towards money, as I think there was during the depression; less spending, more saving, people becoming more conservative in their attitudes and thinking, what will that lead to in the future?
Will the manufacturing industries (read autos) transfrom themselves for the future?
The point I am trying to make here is the black swan event may well not be the crisis itself but the movement of thought after it.
If we are to invest and build wealth for the future then a dynamic change in thinking toward risk/reward may well bring about fundamental changes in the flow of liquidity to different asset classes; ones that were previously unpopular because of returns or were previously thought of as high risk.
I am trying to think beyond populist thinking here ie. lets just compare it to x recession or the depression and extrapolate from there and say well, crime will go up so the security industry is good or fear may bring about disease/war and invest in those assest classes for the short term.
From my perspective issues such as the environment could trump the doc com boom. Environmental fear could push electricity and oil prices to new highs pushing returns in renewables into favourable territory for the long term.
There is a lot of resistance toward EFTs ATM for the pain they will cause but will it reform our investing future? There will already be enough pain paying for the Rudd bubble bonus to keep the dream alive.
If there is a fundamental change in peoples thinking towards money, as I think there was during the depression; less spending, more saving, people becoming more conservative in their attitudes and thinking, what will that lead to in the future?
Will the manufacturing industries (read autos) transfrom themselves for the future?
Hi Chatto: We certainly live in a rapidly changing world but I don't know that the average punter (read investor) is any smarter. As for global warming, I'm in the older generation and I view it as a load of crap. The front page of the Australian today has a headline Labour heartland turns on ETS..... Surprise surprise, the workers in Newcastle Gladstone and Mount Isa have just woke up to the consequences of unilaterally implementing a carbon trading scheme. It will mean tens of thousands of jobs will go to china where they thumb their nose at the trendy global warming tree huggers
Sorry mate I'm just a little bit right of Atilla the Hun when it comes to the unwashed greenies. When my kids argue with me about ETS I remind them about the nonsense of the Y2000 beat up which their teachers told them would stop the world
NR, I was actually trying to gain some insight into perceptions of black swan events, in this instance the GFC and the repecussions of it and what this means for the future.
The 'green revolution' was an example that I think may play out, after all it is not your nor my thinking that will inherit the earth is it, its our kids!
Anyway I am trying to see beyond the hardship to what lies ahead. Maybe too far perhaps for here.
The 'green revolution' was an example that I think may play out, after all it is not your nor my thinking that will inherit the earth is it, its our kids!
Anyway I am trying to see beyond the hardship to what lies ahead. Maybe too far perhaps for here.
greenwashing is a bit overdone - but that said, the jobs lost in coal and oil wouldn't be 50% enough to start up a national solar and wind grid.
horses for course. immediate baindaid or longterm cure....?
horses for course. immediate baindaid or longterm cure....?
