Predicting interest rates - disspelling myths.

You obviously havent noticed but the AUD has been having a very strong last 2 weeks - the carry trade is back on.
This week the AU$ lost all the gainsand is back at 0.68 US$ like a month ago.
But the carry trading doesn't matter, it is just speculation and money that goes in AAA rating. The only way real money is coming into Australia now is because government is backing all loans Australian banks make. But in australia there is somewhat 3 trillions of debt and I'll bet the Australian rating will drop from AAA and interest rate will rise if we end up using taxpayer moeny to back up everything. To me is obvious that government backing loans can't go on forever and money inflow can dry up again.
 
Sphinx,

Please get over US, UK and Japan.

US - 18 million vacant houses
UK - most of guest workers has packed up to Turkey, Eastern Europe, Australia
Japan - Could really 2x2 m urban grave can be anybody's dream?

Australia - severe housing shortage

That is why I say most people have "confirmation bias". Depending on which figure you look at, Australia could be in severe oversupply (ABS census data) or undersupply (bank/property insitute fake economic analysis or population data in just the past 2 years when population data temporarily looks good for the undersupply argument..IF you do a long projection using these two years of growth figure).

The reality: severe oversupply .. price increase supported by credit bubble.

population growth :5.8%
Total dwellings growth 8.2%
Occupied Dweling growth 7.4%
Unoccupied Dwellings growth 15.7%

And if you look at SQM research's rental vancancy data in Oct/Nov. , you can see vacancy rate in cities are shooting through the roof... .where is the rental shortage now?

Of course, people in the denial stage will dismiss/discredit all these data and continue to comb through bank/RE institutes' "analysis" for rosy undersupply picture.

P.S. 1 And let me remind you, there were numerous "official" analysis of US/UK's severe undersupply before the crash using the same models Australia is using today. Good luck to you if you "trust" the undersupply analysis.
 
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Sphinx,

Please get over US, UK and Japan.
UK - most of guest workers has packed up to Turkey, Eastern Europe, Australia
.


If you think immigrants in Australia won't leave, you would be wrong. Already, we have seen many relatively new immigrates have a sting stay (1 month) just to "activate" their permanent residence visa. These people still have a very good professional job back in their country but find it difficult to find a job here in the current environment. So they take an annual leave to come to here to activate their visa but return immediately (they only need to stay 2 out of 5 years to make their visa valid.. they may choose to do that later when the economy recovers). They even have a fashionable name for that now, literally "short embarkment". These people will be still on the official "population growth" data.

And many more are staying just for the so called "immigration prison" (2 years to get an Australia passport and then go back to work in their own country... these two years are just like a prison stay for them...thus the term). When the economy is down, immigrants feel much more comfortable muddling through in their home country using extended friend/relative networks and mutual help rather than staying in an equally bad but foreign economy. If you scan through some of the immigrant discussion forums, the talk of returning their home country to ride out the crisis has substantially increased.

Good luck to you if you think Australian immigrates have nowhere to go.

And because skilled immigrants can't get unemployment benefits for the first 2 years (wasn't a problem when they can always find a job in a good economy), now it is increasingly practical for them to leave, even officially they are still on the population growth number. (Their visa won't be revoked until 5 years later. They need to stay 2 out of 5 years in Australia to get the visa renewed or they have to become a naturalized citizen).
 
Got a link to the SQM vacancy data? Last I looked in my area it was 1.3 percent up from 0.7 percent. That's a doubling of the vacancy rate but I'm not sure that a 1.3 percent vacancy rate is cause for alarm.
 
Got a link to the SQM vacancy data? Last I looked in my area it was 1.3 percent up from 0.7 percent. That's a doubling of the vacancy rate but I'm not sure that a 1.3 percent vacancy rate is cause for alarm.

Sydney CBD: http://sqmresearch.com.au/graphs/graph_vacancy.php?region=nsw::Sydney+CBD&t=1

One can always find places that still have a relatively low vacancy rate to "justify" what they "want to" believe. But The overall trend is obvious. Seasonally adjusted, Nov. should usually be a dip but this particular Nov. is a hike! When Dec./Jan. data are in, I wouldn't be surprised that many places will be over 9%.
 
I think you might have missed the point that it's not simply the headline cash rate that stimulates or contracts the economy, but the headline rate in relation to inflation and other economic indicators. If Inflation hit 15%, and the cash rate hit 14%, this a more stimulatory stance than if Inflation is at 3% and a cash rate of 4%.

Do you believe that if infation hit 10%, and interest rates went up to say, 7%, this is a contractionary stance? I would disagree.

I do agree with your points about debt ratios though.
 
Ah, Lorne *thinks envious thoughts*

QUOTE]In those instances, yes, camelum saltare doces.[QUOTE

Your latin meaning you cannot teach camels to dance.

Having worked in Northern Saudi Arabia from 1980 to 1982, I use to practice my arabic by going down to the souk in the evening and would often share a rope hamock with the bedouins and smoke the hooka (a water pipe with a mixture of dried fruit & tobacco).

The Saudi's had a saying "Is that camel dung in your ears or are you just hard of hearing?


QUOTE]In my world: the GFC appears to have hit it's peak but isn't getting much better, all the financial mumbo jumbo of the last 18 months is now hitting the real economies in first and second world economies hard and what follows from there is people losing jobs.

In the real economy, the worst is yet to come and though Australia is better placed than most it is not so well-placed as to avoid (at best, in my view) a soft recession. In recessionary environments, the heavily leveraged are like those crab boats you see on Deadliest Catch as ice builds up....when you're seriously top heavy it doesn't take much of a wave for things to turn turtle.

The world banking system is technically insolvent due to a combination of the fractionalised reserve banking system and outright usury. We can look forward to at best a decade (realistically two decades) to put the funny money saga behind us

Our fiat currencies and paper equities are in for a long sustained period of devaluation a la Argentina. As you have so succinctly highlighted the deleveraging phenomena will not spare property.

Unencumbered property, gold, silver and some depression resistant businesses is the investors medieval keep to fend off the wolves at the draw bridge.
 
Sydney CBD: http://sqmresearch.com.au/graphs/graph_vacancy.php?region=nsw::Sydney+CBD&t=1

One can always find places that still have a relatively low vacancy rate to "justify" what they "want to" believe. But The overall trend is obvious. Seasonally adjusted, Nov. should usually be a dip but this particular Nov. is a hike! When Dec./Jan. data are in, I wouldn't be surprised that many places will be over 9%.

My area is Brisbane CBD and immediate surrounds. Currently showing at 1.8% vacancy. http://sqmresearch.com.au/graphs/graph_vacancy.php?region=qld::Brisbane+CBD&t=1

I dont think Ill panic about vacancy yet. Particularly considering I can only see 3 cranes on the horizon and 2 of those cranes are for uber super luxury apartments which isnt my market.
 
The world banking system is technically insolvent due to a combination of the fractionalised reserve banking system and outright usury. We can look forward to at best a decade (realistically two decades) to put the funny money saga behind us
Ah well, at least the 3 month libor is in free fall. Another big ease overnight!

The big thaw

Good to see the weight of money and global easing stance starting to have an effect.

But what do I know. Clearly this is armageddon! :D

Cheers,
Michael
 
Its the end of the world as we know it. And I feel fine.














That's great, it starts with an earthquake, birds and snakes, an aeroplane
 
Sydney CBD: http://sqmresearch.com.au/graphs/graph_vacancy.php?region=nsw::Sydney+CBD&t=1

One can always find places that still have a relatively low vacancy rate to "justify" what they "want to" believe. But The overall trend is obvious. Seasonally adjusted, Nov. should usually be a dip but this particular Nov. is a hike! When Dec./Jan. data are in, I wouldn't be surprised that many places will be over 9%.

You're not suggesting some conspiracy now , do you ? :D

I looked at your link and clicked on Belconnen, since it was first on the list, which apparently has a vacancy rate of 1.6% and 4% listing. So I did a search on RE.com and came up with 5 , yes FIVE, rentals for the area. Couple of townhouses and three apartments,

http://www.realestate.com.au/cgi-bi...e=any&pxe=any&minbed=&maxbed=&cat=&p=10&o=def

and 10 properties advertised for sale, again mostly apartments

http://www.realestate.com.au/cgi-bi...u=BELCONNEN&cu=fn-rea&pxe=any&t=res&s=act&o=p

The 4% for listings and 1.6 for vacancies would suggest there are less then 400 properties in Belconnen and from the numbers on the advertised apartments I kind of doubt it, eg. 59/20 BEISSEL STREET would imply 59 different properties in just that one building. Looking at Beissel st I'd say there are about 400 apartments on that street alone.
Even making allowance for only half the properties available in Belconnen being advertising in RE.com the numbers still don't make sense.

The graphs look nice and colorful but if the numbers for an easy suburb like Belconnen look dodgy what are the chances that Sydney numbers are right ? :D
 
I think you'll find the SQM data is postcode based rather than suburb name. Looking at the ACT, there's only 8 suburbs listed. If you wack the postcode for Belconnen into domain.com.au you get:

29 rentals.
48 for sale.
 
Correction...the first "view" Yorke refers to is by region but you can change to postcode by changing the "view" on the bottom LHS.

Belconnen (2617) is showing 62 vacancies on SQM.
 
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