Is it time to get out of debt?

The euro will collapse, perhaps not right away, perhaps in the next 5 years or so, because let's face it, no socialist government has the will to enforce the deep austerities that need to be effected to reduce debt.

The euro bailout was the death of the euro in my opinion, all they did was "kick the can" a few years down the road, but it will come back with a veangence. I believe that come 2011-2012, the world will begin to lose faith in the US dollar as the economy proves it is not recovering. The key to all this is ofcourse China, and china depends on the euro and US market to keep its game of 8% GDP every year...not sustainable.

I believe there will come a time (my hope is that we are still a few years away) when fiat currencies will implode, and the majority of the people's wealth will be systematically wiped out (those that have savings in currencies). I also believe ppl in a lot of debt will experience incredible hardships if not outright bankruptcies.

Now I know my posts have been a lot of D&G in the past, but I have been partially vindicated by whats happened in the past month. I fear this is just the beginning. I see the debt around the world in governments that have no means to restore their budgets.

I am thinking that the best strategy now is to reduce debt, and "accumulation" of property, and hence more debt, should be stalled until we see through whats to come.

What does everyone think? Is expanding or holding debt with all that's going on? Should the next 2 - 3 years be about cutting down debt drastically?

Would like to hear everyones opinion.
 
Debt with cashflow will win imo.

Rates IMO will come down soon, give 25-50 bp up max, and will come down between 50-100bp from todays rates.

8% interest rates are the new 18% 1980 rates.
 
Assuming you concern is right, and I an also doubtful of the recovery, then what worked in the great depression?

As I understand it;

Wealthy Houses lost value, both CG and rental
Shares dived and some bankrupted
Cash was lost from the banks going under, that should be Ok in Aus but elsewhere?
Lower priced blue collar worker property should not dive that much and as people have to rent then rental may stagnate but not drop too much.

IF you do cash up, what do you do, buy Gold?

Peter 14.7
 
Are you nonrecourses lover?
You run the risk of looking a little silly if you keep a closed mind.

Here are a few Gentlemen who, if they had any decency, would be shamefaced:

http://www.youtube.com/watch?v=4AgTt8iFi2Y

Peter Schiff was always ridiculed on US money channels but he was pretty darn right. Anyone who didn't see the GFC coming cannot say that nobody else did or that the wiser heads kept it a secret.

Check out what Schiff is saying today.
 
What does everyone think? Is expanding or holding debt with all that's going on? Should the next 2 - 3 years be about cutting down debt drastically?

Would like to hear everyones opinion.

We have been pretty much on the trail of "consolidation" - reducing our own LVR significantly - to the point of aiming to pay off all our properties within the next 2 years (I am sure much to the shock horror of many here :)).

My generalised opinion (when people ask me for it) is: in the current environemnt, I feel it is safe to expand your IP portfolio as long as the banks will lend you money easily (with no fancy footwork, special products etc). Once they refuse, I would sit back and start reducing the debt / bulding up big deposit for next purchase.

Cheers,

The Y-man
 
I'm by no means being close minded.

You run the risk of looking a little silly if you keep a closed mind.

Here are a few Gentlemen who, if they had any decency, would be shamefaced:

http://www.youtube.com/watch?v=4AgTt8iFi2Y

Peter Schiff was always ridiculed on US money channels but he was pretty darn right. Anyone who didn't see the GFC coming cannot say that nobody else did or that the wiser heads kept it a secret.

Check out what Schiff is saying today.
 
Do whatever you have to do to sleep at night.

There does appear the expectation (by almost everyone) that the government will again step in and intervene in the market to protect our sacred property market, if the SHTF again.

via

- Wholesale lending guarantee.
- Underwriting RMBS issue's.
- FHBG.


What is your expectation?

Australia's economy was primarily saved by China's US$600B government stimulus that just happened to be coal and iron ore intensive. Just our luck.


Have a peek at recent Credit Default Swap Action for Australia Sovereign Debt. Sentiment can change very rapidly.

 
.

Now I know my posts have been a lot of D&G in the past, but I have been partially vindicated by whats happened in the past month. I fear this is just the beginning. I see the debt around the world in governments that have no means to restore their budgets.

ah but the answer lies in not whether many of your posts have been D&G, but how have you managed to PROFIT from the D&G.

I am a perpetual optimist. I cant alter the hand that is delt to me, all i am interested in is making the best of the hand.

I am not interested in D&G without knowing how to profit from it, D&G just creates negative energy, D&G with a sound risk adjusted way to profit from it creates OPPORTUNITY.

There is always a bull market out there, just not necessarily in conventional ways.
 
Are you nonrecourses lover?

nonrecourse was a value destructive mechanism in opperation, live on this forum.
He came, he D&G'ed, he caused destructive chaos to those who listed to him,
and best of all when he found out a mechanism to make profit (according to some here who have defended him), he road into the sunset.

I really pitty the people on this forum who lapped up his 'words of wisdom'.
 
Assuming you concern is right, and I an also doubtful of the recovery, then what worked in the great depression?

As I understand it;

Wealthy Houses lost value, both CG and rental
Shares dived and some bankrupted
Cash was lost from the banks going under, that should be Ok in Aus but elsewhere?
Lower priced blue collar worker property should not dive that much and as people have to rent then rental may stagnate but not drop too much.

IF you do cash up, what do you do, buy Gold?

Peter 14.7

The probability of entering another great depression is VERY LOW.
The probability of entering a secular bear market is increasing.

Plenty of difference, but still ways to make money.
 
You run the risk of looking a little silly if you keep a closed mind.

Here are a few Gentlemen who, if they had any decency, would be shamefaced:

http://www.youtube.com/watch?v=4AgTt8iFi2Y

Peter Schiff was always ridiculed on US money channels but he was pretty darn right. Anyone who didn't see the GFC coming cannot say that nobody else did or that the wiser heads kept it a secret.

Check out what Schiff is saying today.

Ah but the wise heads made profit from it, and it DIDNT ENVOLVE BUYING GOLD.
 
Debt with cashflow will win imo.

Rates IMO will come down soon, give 25-50 bp up max, and will come down between 50-100bp from todays rates.

8% interest rates are the new 18% 1980 rates.


Maybe yes, maybe no, i wouldnt 'bet' on it though. The catalysts are changing, and i think that the RBA's hands will be tied in the future. They have made the correct action so far.
 
Assuming you concern is right, and I an also doubtful of the recovery, then what worked in the great depression?

As I understand it;

Wealthy Houses lost value, both CG and rental
Shares dived and some bankrupted
Cash was lost from the banks going under, that should be Ok in Aus but elsewhere?
Lower priced blue collar worker property should not dive that much and as people have to rent then rental may stagnate but not drop too much.

IF you do cash up, what do you do, buy Gold?

Peter 14.7

rents where fixed by the gov in the depression
 
The euro will collapse, perhaps not right away, perhaps in the next 5 years or so, because let's face it, no socialist government has the will to enforce the deep austerities that need to be effected to reduce debt.

The euro bailout was the death of the euro in my opinion, all they did was "kick the can" a few years down the road, but it will come back with a veangence. I believe that come 2011-2012, the world will begin to lose faith in the US dollar as the economy proves it is not recovering. The key to all this is ofcourse China, and china depends on the euro and US market to keep its game of 8% GDP every year...not sustainable.

I believe there will come a time (my hope is that we are still a few years away) when fiat currencies will implode, and the majority of the people's wealth will be systematically wiped out (those that have savings in currencies). I also believe ppl in a lot of debt will experience incredible hardships if not outright bankruptcies.

Now I know my posts have been a lot of D&G in the past, but I have been partially vindicated by whats happened in the past month. I fear this is just the beginning. I see the debt around the world in governments that have no means to restore their budgets.

I am thinking that the best strategy now is to reduce debt, and "accumulation" of property, and hence more debt, should be stalled until we see through whats to come.

What does everyone think? Is expanding or holding debt with all that's going on? Should the next 2 - 3 years be about cutting down debt drastically?

Would like to hear everyones opinion.

i think this is thought provoking post and people who are just ridiculing it as plain in denial, or perma bulls - both just as bad.

i see a reduction of debt to be a good thing - PERIOD. my goal is just to own my PPOR outright - i then like the idea of cashflow producing debt (self serving).

IR's can only go to zero to stimulate an economy, but it won't work again and we will need to cull the bad debts like we did in the 80s and raise them infinitely to cut off the dead flesh.

i think about this all the time and am doing everything i can to reduce all my debt.
 
i think this is thought provoking post and people who are just ridiculing it as plain in denial, or perma bulls - both just as bad.

i see a reduction of debt to be a good thing - PERIOD. my goal is just to own my PPOR outright - i then like the idea of cashflow producing debt (self serving).

IR's can only go to zero to stimulate an economy, but it won't work again and we will need to cull the bad debts like we did in the 80s and raise them infinitely to cut off the dead flesh.

i think about this all the time and am doing everything i can to reduce all my debt.

There are three basic ways to reduce debt:
(1) cash flows from investments
(2) cash flow from personal employment
(3) disposal of assets

Given (1) & (2) are likely to be relatively low relative to the size of the debt, (3) looks like the most efficient option, especially as most people still have the opportunity to sell into a strong market.
This is what i have been doing this year. I am not liquidating everything but i am taking 'money off the table'.

I guess its why i am also so 'blazay' or what ever the word is, in regards to shares. My property portfolio IS NOW LOW GEARED, i have plenty of spare ammunition if i need it.
 
I have been doing 3 which hasnt achieved much as property in the west has been hammered so hard - just crystalising losses really.

1 and 2 are my main focus now and i think i have nailed it - this week will confirm.
 
blasé |bläˈzā|
adjective
unimpressed or indifferent to something because one has experienced or seen it so often before : she was becoming quite blasé about the dangers.
ORIGIN early 19th cent.: French, past participle of blaser ‘cloy,’ probably ultimately of Germanic origin.
 
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