The current precarious financial consequences are about to wash over us. The first link is related to our largest trading partner Japan, read and weep;
http://www.theage.com.au/national/japan-plunges-into-depression-20090216-899i.html?page=-1
To recap my predictions, this has been made difficult as I have just discovered as when I try to go back over my old posts it only goes back 10 pages to mid September some of the pertinent posts go back before x-mas last year when I was posting in Mauritius
1. ASX 300 to fall to 3500 (mid September 2008 call)
2. Reserve interest rates to drop to 2% (mid July 2008 call)
3. Financial tsunami call (Feb 2008 in an SMSF thread)
4. Put 5% of your assets into gold (March 2008 call)
5. Dollar to drop to 38 cents 2009/10 (July 2008 call)
6. Unemployment not to go above 6.5% (September 2008 call)
7. Rents will not appreciably fall when property prices collapse (called September 2008 call)
8. Residential to drop 40-50%, Commercial up to 70% ( called March-April 2008?)
9. Deflation in Australia will largely be confined to property and share values initially ( call Oct 2008)
10. ASX 300 to fall below 2200 (call early November 2008)
The Why of the coming collapse of property values specifically in Australia is complex with external and internal triggers. Internally it is related to a tax system in Australia that allows high worth individuals to totally negative gear away their exertional income and qualify for a low income family supplement.
In recent years it has not only been the Chardonnay chattering class that has indulged in the best tax minimization scheme the world has ever seen. Thanks to debt securitization rolled out first popularized by Aussie home loans anyone over the age of 18 could gear up to the eye balls. Councils, State and Federal governments aided and abetted this huge Ponzi scheme, reaping a bonanza in soaring rates, land tax and Capital gains taxes.
The continued rise in asset values is predicated on the continued willingness of fresh investors paying ever increasing prices and government acquiescence in limiting the supply of land in the capital cities. Because we are a young country with an ever increasing immigrant influx there are only pockets of oversupply (aka the gold coast white shoe brigade).
Over the years the Ponzi scheme has drafted in property valuers to the point where drive by valuations became the norm for our four pillars (nab, ANZ, Westpac, CBA).
At the moment we are witnessing a huge bear trap that is going to engulf undercapitalized first home owners with properties that will collapse in value when the soft depression really starts to bite.
For those who have purchased property before 2002 the collapse will be managable provided you have paid down some principle. If you have spare cash this is where you want it working so that in the years 2012 to 2015 you are holding an asset that has debt in Australian dollars that are worthless. This is when those properties that are realistically valued at pre 2002 prices will protect you from the sting of the fiat Aussie peso.
For the property luddites who think nothing is going to change here is an explanation of why the world banking system is insolvent;
http://www.villagevoice.com/2009-01-28/news/what-cooked-the-world-s-economy/
http://www.theage.com.au/national/japan-plunges-into-depression-20090216-899i.html?page=-1
To recap my predictions, this has been made difficult as I have just discovered as when I try to go back over my old posts it only goes back 10 pages to mid September some of the pertinent posts go back before x-mas last year when I was posting in Mauritius
1. ASX 300 to fall to 3500 (mid September 2008 call)
2. Reserve interest rates to drop to 2% (mid July 2008 call)
3. Financial tsunami call (Feb 2008 in an SMSF thread)
4. Put 5% of your assets into gold (March 2008 call)
5. Dollar to drop to 38 cents 2009/10 (July 2008 call)
6. Unemployment not to go above 6.5% (September 2008 call)
7. Rents will not appreciably fall when property prices collapse (called September 2008 call)
8. Residential to drop 40-50%, Commercial up to 70% ( called March-April 2008?)
9. Deflation in Australia will largely be confined to property and share values initially ( call Oct 2008)
10. ASX 300 to fall below 2200 (call early November 2008)
The Why of the coming collapse of property values specifically in Australia is complex with external and internal triggers. Internally it is related to a tax system in Australia that allows high worth individuals to totally negative gear away their exertional income and qualify for a low income family supplement.
In recent years it has not only been the Chardonnay chattering class that has indulged in the best tax minimization scheme the world has ever seen. Thanks to debt securitization rolled out first popularized by Aussie home loans anyone over the age of 18 could gear up to the eye balls. Councils, State and Federal governments aided and abetted this huge Ponzi scheme, reaping a bonanza in soaring rates, land tax and Capital gains taxes.
The continued rise in asset values is predicated on the continued willingness of fresh investors paying ever increasing prices and government acquiescence in limiting the supply of land in the capital cities. Because we are a young country with an ever increasing immigrant influx there are only pockets of oversupply (aka the gold coast white shoe brigade).
Over the years the Ponzi scheme has drafted in property valuers to the point where drive by valuations became the norm for our four pillars (nab, ANZ, Westpac, CBA).
At the moment we are witnessing a huge bear trap that is going to engulf undercapitalized first home owners with properties that will collapse in value when the soft depression really starts to bite.
For those who have purchased property before 2002 the collapse will be managable provided you have paid down some principle. If you have spare cash this is where you want it working so that in the years 2012 to 2015 you are holding an asset that has debt in Australian dollars that are worthless. This is when those properties that are realistically valued at pre 2002 prices will protect you from the sting of the fiat Aussie peso.
For the property luddites who think nothing is going to change here is an explanation of why the world banking system is insolvent;
http://www.villagevoice.com/2009-01-28/news/what-cooked-the-world-s-economy/
