Recession likely in Australia

[Kennethkohsg]

Dear All,

1. Chris Zappone, in his article, "Recession On The Way", which was published in the Sydney Morning Herald Newspapers today reported that :

a. "Australia 's economy will begin to shrink by the end of the year as global forces align with sluggish domestic demand, according to JPMorgan economist Stephen Walters."

b. "Gross domestic product growth is expected to fall to -.3% in the December quarter of 2008 and -.4% in the first quarter of 2009, as weaker demand for commodities and lower prices paid from them saps economic growth, JPMorgan predicted today, revising earlier estimates."

c. "Forecasts for 2009 have moved down to 0.7%, from 1.4%. For 2008,"

d. " the Australian GDP growth is now forecast at 2.1%, down from 2.5%... Household spending is expected to come to a standstill in 2009, adding to a sluggishness weighing on the economy." the bank said

e. "Overlaying all of this is the impact of the global financial crisis, with many Australian investors now unable to access their life savings tied up in investment products excluded from the Government's new deposit guarantee arrangements," JP Morgan chief economist Stephen Walters said in a statement.

f. "The sand clogging the gears of the local financial system, along with the biggest dive in equity prices for more than two decades, and the 10% decline in house prices we now anticipate, will be dead weights on household spending and confidence for some time."

g. "The revisions ot national growth estimates come one week after JP Morgan predicted unemployment would hit 9% by the end of 2010, putting more than a million Australians out of work. Mr Walters downgraded his expectations for Australian growth for the third time in as many weeks ."

h. "Economists have rushed to lower their outlook for growth in Australia and globally since the global financial crisis begin to send markets plunging, dashing profit expectations, and pulling forecasts down with them."

i. "With the economy expected to begin to stagnate, JPMorgan now sees a "steeper drop" in inflation, giving the Reserve Bank room to cut rates more aggressively in coming months."

j. "The market is pricing in a half a percentage point rate cut on Tuesday when the RBA meets, and betting there is almost a 75% chance of a 75 basis-point cut, which would take the interest rate to 5.25%, from its current level of 6%."

k. "We now expect the easing cycle to end with the cash rate at 4% in the second half of 2009; previously, we assumed a terminal policy rate target of 4.5% in June next year."

l. The RBA's inflation fight has been assisted by the fall of the Australian dollar over the past four months, Mr Walters said.

m. The Australian dollar has slid nearly 40% in value against the US dollar since July, when it was at near parity with the greenback. This afternoon it was trading 64.17 US cents."

n. "A weaker Australian dollar makes imports - such as electronics and cars - more expensive, which can act as a deterrent to consumer spending and, in turn, ease inflationary pressure. A weaker currency can also expose the domestic economy to more inflation because crude oil is priced in US dollars."

http://business.smh.com.au/business/recession-on-the-way-20081029-5ax2.html

2. For your further comments and discussion, please.

3. Thank you.

regards,
Kenneth KOH

 

[the.j]

Wooah - poke me in the eye - I am going out buying (media - and beer stocks) you made your point LOL

 

[Kennethkohsg]

Dear All,

1. Chris Zappone, in his article, "Recession On The Way",

b. "Gross domestic product growth is expected to fall to -.3% in the December quarter of 2008 and -.4% in the first quarter of 2009, as weaker demand for commodities and lower prices paid from them saps economic growth, JPMorgan predicted today, revising earlier estimates."

Kenneth KOH

&&&&&&&&&&&&&&&&&&&&&
Dear All,

1. The economists at Goldman Sachs JBWere are presently predicting that " Australia is already halfway through an official recession - defined as two consecutive quarters of negative growth."

2. "The investment bank JP Morgan yesterday, has also predicted that "plunging world growth and commodity prices would spark a short, if shallow, recession over the six months starting this month... It (also) expects a million Australians will be jobless by the end of the decade as businesses shelve or cancel investment plans."

3. "But this recession is not expected to be as long or as deep as its predecessor in the early 1990s, which ran for a full year...This time the economy will be assisted by the stimulatory impact of a falling dollar, the potential for the Government to run down its budget surplus even further and the Reserve Bank's ability to slash interest rates."

http://business.smh.com.au/business/yes-were-in-for-a-short-sharp-shock-20081029-5bgj.html?page=1

4. For your further comments and discussion, please.

5. Thank you.

regards,
Kenneth KOH

 

[MichaelW]

Hi Kenneth,

Does anyone else get the world's biggest smile when they read all this fantastic news!

A falling AUD, global fear, the risk of a short sharp recession and the RBA plans to ease rates to 4%! Add 200bp odd for the bank spreads and we're talking 6% interest rates. Happy days!

Keep spreading the doom and gloom boys, I can't wait until we see rates that low and some depressed prices by the punters who've bought into the "end of the world" scenario.

The economic modelling that NIEIR did for our organisation shows government expenditure propping up our GDP for the next 2 years, and a return of investors to the property market with a big rush in 2011 and onwards. The chart they did for projected shortfall in housing and vacancy rates would blow your mind. And they're projecting median prices to hold or fall only very moderately over the next two years as the market catches its breath.

Somebody wake me up, I think I'm dreaming!!

j. "The market is pricing in a half a percentage point rate cut on Tuesday when the RBA meets, and betting there is almost a 75% chance of a 75 basis-point cut, which would take the interest rate to 5.25%, from its current level of 6%."

k. "We now expect the easing cycle to end with the cash rate at 4% in the second half of 2009; previously, we assumed a terminal policy rate target of 4.5% in June next year."

3. "But this recession is not expected to be as long or as deep as its predecessor in the early 1990s, which ran for a full year...This time the economy will be assisted by the stimulatory impact of a falling dollar, the potential for the Government to run down its budget surplus even further and the Reserve Bank's ability to slash interest rates."

Cheers,
Michael

 

[joe jo jo]

Hi Kenneth,

Does anyone else get the world's biggest smile when they read all this fantastic news!

A falling AUD, global fear, the risk of a short sharp recession and the RBA plans to ease rates to 4%! Add 200bp odd for the bank spreads and we're talking 6% interest rates. Happy days!

Keep spreading the doom and gloom boys, I can't wait until we see rates that low and some depressed prices by the punters who've bought into the "end of the world" scenario.

The economic modelling that NIEIR did for our organisation shows government expenditure propping up our GDP for the next 2 years, and a return of investors to the property market with a big rush in 2011 and onwards. The chart they did for projected shortfall in housing and vacancy rates would blow your mind. And they're projecting median prices to hold or fall only very moderately over the next two years as the market catches its breath.

Somebody wake me up, I think I'm dreaming!!



Cheers,
Michael

Im somwhat the same, often questioning myself, but with all the planning in place, it could be the best thing that ever happened to me.


Apart from a few little (or big) macro issues, Im quite comfortable with whats going on around me.

 

[Hgrant]

Hi Kenneth,

Does anyone else get the world's biggest smile when they read all this fantastic news!

A falling AUD, global fear, the risk of a short sharp recession and the RBA plans to ease rates to 4%! Add 200bp odd for the bank spreads and we're talking 6% interest rates. Happy days!

Keep spreading the doom and gloom boys, I can't wait until we see rates that low and some depressed prices by the punters who've bought into the "end of the world" scenario.

The economic modelling that NIEIR did for our organisation shows government expenditure propping up our GDP for the next 2 years, and a return of investors to the property market with a big rush in 2011 and onwards. The chart they did for projected shortfall in housing and vacancy rates would blow your mind. And they're projecting median prices to hold or fall only very moderately over the next two years as the market catches its breath.

Somebody wake me up, I think I'm dreaming!!

Cheers,
Michael

So now its 2-3 years before a recovery. Make up your mind guys. Its OK to admit you were wrong

 

[Kennethkohsg]

Hi Kenneth,

Does anyone else get the world's biggest smile when they read all this fantastic news!

A falling AUD, global fear, the risk of a short sharp recession and the RBA plans to ease rates to 4%! Add 200bp odd for the bank spreads and we're talking 6% interest rates. Happy days!

Keep spreading the doom and gloom boys, I can't wait until we see rates that low and some depressed prices by the punters who've bought into the "end of the world" scenario.

Cheers,
Michael

+++++++++++++++++++
Hiya Michael,

1. Like you, I do.

2. This is because there are some good news midst the negative news, such as the likely further interest rate cut, that the Recession to come, if it does come in the first place, is likely to be a shallow one and shorter one as compared to the last Recession that Australia needs to have during the early 1990s period.

3. If you are truly indeed a "die-hard" optimist yourself, as I have always used to believed that you are, then I would think that you would not have allowed yourself to be adversely affected by these "unconfirmed" negative opinions as projected/expressed by the economists by Goldman Sach and JP Morgan;- for indeed if they are to be truly believed and properly relied upon, then, their parent Banks, in the US, would have accurately forecasted the present global financial crisis, in the past and avoid their own ill-fortune, in the first place.

4. Personally, I am wondering how accurate and reliable are these Goldman Sach/JP Morgan Bank economists' projections vis-a-vis those officially used/made by the RBA, in the first place.

5. I recall reading that the RBA has recently cut its own growth forecast for the Australian Economy from 2.25% down to 1.5% for 2008. Unemployment is also expected to rise to less than 5% or 6% at this point in time, as far as the RBA's official forecast, is concerned.

6. No, I do not see myself as a D+G, but as one who is going after the "truth" or/and learning about the "truth" regarding the likelihood of Australia falling into an official Recession in the immediate near future. This is part of my on-going self-education to further improve my own property invsting knowledge and skills.

7. So far, while many present circumstances and news reports may seem "bleak" to a certain extent, however, RBA has continued to talk about achieving a soft landing for the Australian Economy without neccessarily falling into a Recession.

8. Let us remain optimistic and patiently await to see the RBA's performance outcome as to whether the RBA is indeed able to safely and "skilfully" steer the Australian Economy out of the present global financial crisis and the impending global Recession, relatively unscathed, as it has previously and continually done so for the last 16 years.

9. Let us openly embrace the good news regarding the recent 1% Official Interest Rate cut by the RBA, the A$10.4 Economic Security Stimulus Package and the increase in the FHOG from A$7,000 to A$14,000/A$21,000, the falling Australian Currency and their likely positive impact on the various housing markets, even though they are still quite limited, to a certain extent, at this point in time. At the basic minimum, these measures, which were originally aimed at averting an Recession in Australia, will certainly serve to delay the Recession from occurring in Australia midst the present on-going global financial crisis, if truly the Recession cannot be effectively avoided, in the first place.

10. For those property investors who have broken through their own FEARs and managed to overcome the prevailing negative market sentiments and FEARs spreading across Australia-wide, things seem to be improving for themselves and for their families as well as for the various hgousing markets in Australia.

11. This is especially so when we can expect another 0.5%-0.75% Official Interest Rate by the RBA over the coming weeks in November 2008 as well as further rate cuts in December 2008 period where neccessary, please.

12. For your further comments and discussion,please.

13. Thank you.

regards,
Kenneth KOH

 

[Kennethkohsg]

Dear All,

1. The Sydney Morning Newspapers today reported that

a. "Telling households to beware of too much pessimism, Mr Battellino also said the
economy was on track to avoid the recession engulfing many other developed countries."

b. "he (Battelino) was optimistic that Australia could sidestep a coming global recession, just as it did in 2001...That is certainly what we are aiming for, and there is c. nothing in the data to date to suggest that we are off track,'' he said.

c. "This argument was in part based on the emergence of China as Australia's biggest trading partner and an expectation it would continue to demand Australian resources for its expansion."

d. "The Reserve Bank is still widely expected to cut rates by at least half a percentage point at its policy board meeting next Tuesday, though deputy governor Ric Battellino's comments saw markets trim expectations of a bigger move."

e. "The RBA slashed its key cash rate by 100 basis points to 6.0% earlier this month, the biggest cut in 16 years, even as core inflation was running at a 17-year high of 4.7%... Investors have been assuming rates would be lowered as far as 5% by Christmas."

f. "Still, Mr Battellino remained confident that inflation would come down over time."


g. "He(Battellino) also argued that house prices in Australia would not fall nearly as far as they have in the United States, in part because there was no excess of unsold, empty homes here....It is important not to become too pessimistic because, fundamentally, household finances and the economy more generally remain in good shape,'' concluded Mr Battellino.

http://business.smh.com.au/business/inflation-reduces-scope-for-rate-cut-20081030-5bp5.html?page=2


2. The same SMH newspapers, in a separate article, entitled, "RBA's Soothing House Talk Understandable", goes on further to report that:

a. "So central bankers like Ric Battellino can be forgiven for wishing to hose down fears of a collapse in housing prices, especially if those fears are not soundly based."

b. "Fortunately, Battellino's arguments appear sound."

c. "In short, he said Australia's housing market was not heading in the same direction as that of the US - it is actually leading the way, having peaked three years earlier in 2003."

d. "Moreover, the local market is characterised by undersupply and considerable pent-up demand in the event of a dip in prices, in contrast to the massive oversupply hanging over the US market."

e. "What's more, Australia has avoided the collapse in lending standards that in the US led to soaring default and foreclosure rates, the catalyst for the sub-prime loans crisis and possible global recession."

f. "Even so, there is potential for a weakening economy to set off a nasty chain reaction of rising unemployment, increasing defaults, forced sales, dropping prices, an even weaker economy, and so on."

g "Although he did not say so explicitly, it seems likely that Battellino and his colleagues at the RBA would prefer to avoid it if they can...They have enough to deal with as it is."

h. "Soothing talk about housing prices from one of Australia's top central bankers is understandable, given the damage that could be done by a slump in the housing market."

i. "These aren't normal times...The global share market, along with Australia's, has suffered a slump of similar magnitude to the 1987 and 2000 crashes...The panic in credit markets probably has no precedent, at least on a global scale, since the 1930s...The prospects for the world economy over the next year or so are dim and it seem the commodities boom driving the Australian economy forward in the past decade is changing into reverse gear.

j. The last thing policymakers need right now is another major shock to the economy...And, make no mistake, a big fall in housing prices would be a huge shock."

k. "Five years ago, in its World Economic Outlook, the International Monetary Fund (IMF) published an article titled "When Bubbles Burst". The article, written by Thomas Helbling and Marco Terrones, defined a housing market bust as a fall in prices of at least 14 per cent (after adjusting for consumer price inflation) with an average of 30 per cent.

l. For shares, a bust meant a fall of at least 37 per cent, with a 45 per cent average.

m. Their most chilling result concerned the impact of housing and share market busts in output (best measured by gross domestic product - GDP).

n. Three years after the average share market bust, GDP was likely to be four per cent lower than it would have been if not for the slump, they found.

o. "For housing, the loss of output was double that, eight per cent of GDP...Moreover, housing price slumps typically lasted for four years - one and a half years longer that share price busts."

p. "Among the reasons they gave for this was that housing slumps had bigger negative effects on wealth, while their adverse effects on banking systems were stronger and more severe, observations that ring very true as the US economy sinks into recession."

http://news.smh.com.au/business/rbas-soothing-house-talk-understandable-20081030-5btr.html


3. For your further comments and discussion, please.

4. Thank you.

Cheers,
Kenneth KOH

 

[MichaelW]

Kenneth,

Two very good posts, kudos to you...

You need to steer your own course, and not let prevailing sentiment overwhelm reason. I'm not saying that you must stand strong in the face of overwhelming negative consequences, just that you need to determine for yourself the implications of your actions based on your understanding of the investing environment.

I've done my own analysis and decided to hold my Mona Vale MUH site despite the doom and gloom and despite a really tight cash flow position. So far, that has proved to be the correct course of action. My cash flow is improving daily, and I personally believe price prospects are also improving daily. Couple this with falling commodity prices and the lag impact on construction costs and my long term strategy is looking strong.

I am not a speculator. I don't "trade" properties based on short term market direction. The switching costs are just too high. I invest to grow a significant asset base over time. The current economic slowdown is all part of the usual investment environment and you need to allow for this occurring every ten years or so when you adopt your investing strategy. Failure to do so shows naivety and a tendency to short term speculation.

I am not a proponent of speculation.

Cheers,
Michael

 

[Kennethkohsg]

Dear All,

1. It was reported in the SMH Newspapers today that the Australian Treasury is still projecting a reduction of the Australian Economy growth rate down to 2% to be achieved for FY 2008/2009, together with a revised A$4.9 Billion Budget Surplus.

http://business.smh.com.au/business/budget-takes-40b-hit-20081105-5i0u.html?page=2

2. Unemployment rate is tipped to reach 5.75% level with projected CPI level to hover around 3.5%p.a during the same period.

3. Consequently, it is unlikely that Australia will face a Recession by the end of 31st December 2008, as previously projected by some of the bank economists from the Goldman Sach JBWere and JP Morgan Investment Bank.

4. For your further comments and discussion, please.

5. Thank you.

regards,
Kenneth KOH

 

[tubs]

My comment is that there seems to be far too much quoting newspaper articles going on here.

Nobody knows what's going to happen. If they did, then maybe we wouldnt be in this mess. Either that, or the people writing these articles would be so good at predicting the future that they'll make a million dollars in the next 6 months and their articles will stop.

At the end of the day, a lot of stuff gets written in the media. Before the AFL grand final there were heaps of articles written by 'experts' that said Geelong would win. And heaps by different 'experts' that Hawthorn would win. And even though more experts said Geelong, it was Hawthorn that prevailed.

So my comment would be that media articles like this should be ignored. You'd go insane working it out or go into a panic reading about it constantly.

Just sit back and see what happens. After all, what are the odds that these experts are that damn good anyway?

 

[Kennethkohsg]

My comment is that there seems to be far too much quoting newspaper articles going on here.

Nobody knows what's going to happen. If they did, then maybe we wouldnt be in this mess. Either that, or the people writing these articles would be so good at predicting the future that they'll make a million dollars in the next 6 months and their articles will stop.

At the end of the day, a lot of stuff gets written in the media. Before the AFL grand final there were heaps of articles written by 'experts' that said Geelong would win. And heaps by different 'experts' that Hawthorn would win. And even though more experts said Geelong, it was Hawthorn that prevailed.

So my comment would be that media articles like this should be ignored. You'd go insane working it out or go into a panic reading about it constantly.

Just sit back and see what happens. After all, what are the odds that these experts are that damn good anyway?

88888888888888888888888888888888888888888888
Dear Tubs,

1. If you do not believe in the reported Australian Treasury's Mid-Year Economic and Fiscal Review figures or/and RBA figures prima facie, then I do not know what kind of data you that actually use, to make your own market assessment, pro-actively.

2. We all learn to "sift" through these information to differentiate "facts" from "opinions" as reported in these newspapers, on a daily basis.

3. Newspapers articles often reflect the prevailing general public opinions, and since we are dealing with the herds' instincts, as a property investor, I find it useful to keep myself well-informed and to be constantly aware if the general public has been adequately and accurately/reliably informed or/and "mis-informed" through these mass media, to a certain extent, so as to properly determine the existing market sentiments/"opinions"/atmosphere.

4. The newspapers columnists offers their alternative specialist views on the subject matter which they are presently reporting on oe/and are being "consulted" upon, which we can then use to compare/contrast our own independant views/assessment.

5. For your further comments and discussion, please.

6. Thank you.

regards,
Kenneth KOH

 

[Peter 14.7]

Hello All

Articles in the papers based on independant stats, studies, data compliled by groups with no vested interest are useful but I agree they are in often hindsight and hence confirm what we already know.

Projections are just that and need to be taken with a guarded eye. IMO australia is toovast and diverse to apply a country wide measure to every man, woman and child. Job losses will be in certain areas heavily and others areas not so much.

I think at this present moment you dont need to wory about whether Australia is going into a recession but instead ask, are you going into a recession?

That is, is your income going to compromised or at risk due to the global market changes. Ironically, anyone in property would be saying yes it is, BUT for the better. Why? Rents are going up and rates are going down.

In say, two to three years, when all this stimulis flows and supply increases, we are very likly to see the reverse. Rents stagnant or flatten and rates creepong up. Yet the recession would be over.

I lived through the 1990 recession and it caused me to be retrenched twice and to lose money in a small company investment once. I worked in construction.

It is very upsetting being retrenched but I learnt, you have to see it as simply life, and move on. My first retrenchment turned out to be best thing that ever happned to me and where I went too made my career.

This time 20 years later I own the business and feel pretty secure with out future income but nothing is ever guaranteed.

Are you recession proof?

Peter 14.7

 

[Kennethkohsg]

Dear Peter,

1. I agree with you to a large extent that central issue at stake is how well or/and adequately prepared are we in handling the consequences on this coming Recession i.e to be "Recession-Proof".

2. The issue is not the Recession per se;- Rather, it is the attendant adverse implications( such as job loss and increased unemployment rate, slower economic growth, lower household spending etc) and FEAR surrounding the existing negative market sentiments which will further "negate" or/and slow down the recovery of the housing markets in Australia.

3. The fact that despite the RBA having cutting a total of 2% off its Official Interest Rate since September 2008 and has officially "reversed" its Official Interest Rate trend, and despite all the existing positive housing fundamentals, such as housing undersupply, increased housing demand from the increase immigration flows, recent increase in the FOHG etc, have "failed" to translate into an effective market recovery to date, shows that the existing housing markets in Australia, is not following the simple Economics Laws of (Housing) Supply and Demand, all other things being equal.

4. Consequently, it appears that this is not the usual "normal" housing market operations that many of us are familiar with.

5. To me, there seems to an intense general (Recession? Housing Affordability?) FEAR Australia-wide, that seems to be "depressing"/curbing the further housing price growth in the various housing markets, at this point in time.

6. Personally, I wonder what does it truly take for the local banks to start "loosening" their lending policy once again and to make housing credit more easily available before housing prices can further grow in the near future? How much longer do we have to wait before the local banks will effectively "loosen" their lending policies and make housing credit more easily available, for further house purchases?

7. Alternatively, have the various median house prices across Australia truly hit its "real" short term housing affordability limit or/and being excessively "over-valued", at this point in time, such that no further growth in its housing prices can be expected over the next few years?

8. Or perhaps, more time is required for the various positive housing fundamentals to work itself through the various housing markets before a real housing market recovery is to be expected.

9. Assuming the housing markets in Australia has last peaked collectively in 2003, then it is about time that we can soon expect the various housing markets to start on its Recovery Phase, especially those in the Sydney and Perth property markets which are presently reported to be still in their "Declining Market" Phase by Herron Todd White Valuers.

10. The other reasons why I am personally interested to see if the Australian Economy will indeed fall into an official Recession or not, in the near future, is for me to learn more about the RBA under Glenn Steven's leadership ;- the accuracy/reliability of its various judgement calls made to date, or/and to learn/know its present skill proficiency level to deliberately slow down the previously fast-growing Australian Economy into a soft landing or/and its ability to safely steer the Australian Economy out of the various global financial crises, relatively unscathed.

11. Consequently, I can be properly "educated" and to stay well-informed regarding the present RBA' performance, under Glenn Steven's leadership;- how it will indeed manage the Australian Economy or/and respond to the various world-wide financial crises, should they continue to occur in the near future.

12. For your further comments and discussion, please.

13. Thank you.

regards,
Kenneth KOH

 

[Kennethkohsg]

Dear All,

1. It is now clear that the Australian Federal Treasury and RBA are presently having
different growth rate estimates for the Australian Economy in 2008.

2. The Australian Federal Treasury's revised estimate for the Australian Economy 2008 growth rate is 2%, which was released last week. It is still much higher than 1.5% revised growth rate figures released by the RBA today.

3. The RBA's previous 2008 growth rate estimate for the Australian Economy was 2.25%, down from its initial 2.75% growth rate projection, given at the beginning of this year.

http://www.abc.net.au/news/stories/2008/11/11/2415841.htm?section=justin

http://www.theaustralian.news.com.au/story/0,25197,24633548-12377,00.html

http://www.theaustralian.news.com.au/business/story/0,28124,24633299-643,00.html

4. Despite the recent A$10.4 Billion Economic Security Stimulus Package introduced by the Rudd Govt as well as positive follow-on effects arising from the China's recent Economic Stimulus Package, I personally believe that the Australian Economy is more likely to grow at a rate closer or/and lower than the RBA's 1.5% revised growth rate figure for 2008.

5. It seems to me that the Australian Federal Treasury seems to have repeatedly "under-estimated" or/and failed to fully appreciate the likely follow-on ill-effects arising from the recent global Credit Crunch Crisis, resulting in a number of "policy reversals" recently and/or have different professional views with the RBA over the proper management of the Australian Economy and certain related fiscal and monetary policies, such as the recent un-capped Deposit Guarantee, given to the local banks by the Rudd Government.

6. Given the recent 1.5% Interest rate Cut announced by the UK and Euro-Zone Central Banks, I will expect more interest rate cuts, probably around 0.5%-1% range, to be further announced by the RBA in its December 2008 Board's Meeting.

7. Consequently, cumulatively speaking, the RBA would have reduced its Official Interest Rate far more by December 2008 period, than what it has sought to increase with its 8 x 0.25% Interest Rate hikes previously, in the first place.

8. Thus, with wisdom gained from hindsight, was the RBA "correct" and fully justified to have previously implemented the 8 x 0.25 % Interest Rate hikes, in the first place? This is in view of the impending global Credit Crunch Crisis and the advance financial tsunami warning, previously given by the ex-Federal Treasurer, Peter Costello, in the past.

9. Alternatively, would it have been "better" for the Australian Economy and the various local housing markets in the first place, if no interest rate hikes was previously taken by the RBA over the last few years to deliberately slow down the Australian Economy and to bring down the local inflation rate;- in view of the ex-Treasurer Peter Costello's previous advance warning over the impending global financial tsunami occuring in the immediate near future after 2007.

10. For your further comments and discussion, please.

11. Thank you.

regards,
Kenneth KOH

 

[quoll]

9. Alternatively, would it have been "better" for the Australian Economy and the various local housing markets in the first place, if no interest rate hikes was previously taken by the RBA over the last few years to deliberately slow down the Australian Economy and to bring down the local inflation rate;- in view of the ex-Treasurer Peter Costello's previous advance warning over the impending global financial tsunami occuring in the immediate near future after 2007.

Too many variables, you will do your head in with questions like this, just accept the fact that the RBA did increase rates and they are now dropping rates very quickly to FIX things.

Maybe I need to have a couple of drinks tonight and then think about this but currently in my sober state it could take up a couple of hours debating what could have happened and what might have happened and what if this that or the other.

At the end of the day the only thing that really matter is what has happened and how can I adjust my plan to deal with it and get a positive outcome.

Cheers
Graeme

 

[Kennethkohsg]

Dear Quoll,

1. While I do agree with you to a certain extent;- though on hindsight wisdom, I wonder why the RBA choose to deliberately "ignore" the risks of the impending financial tsunami that the ex-Treasurer, Peter Costello was warning Australians well in advance, in the first place?

2. This is especially so when the Federal Treasury and RBA are presently having different growth estimates for the same Australian Economy in 2008.

3. Not to mention the existing internal professional differences about the need to cap the Deposit Gaurantee between the Australian Federal Treasury and the RBA, in the first place and Wayne Swan, as the new Treasurer, having barked at the wrong tree regarding the possibility of a runaway inflation risk in early part of 2008.

4. Likewise, it seems to me that the present Federal Finance Minister, Lindsay Tanner seems overly optimistic about the follow-on good effects on Australia arising from the China's impending $855 Million Economic Stimulus Package, when the basic fundamental question is why does China needs to introduce such a hugh Economic Stimular Package for its fast-growing 9% Chinese Economy, in the first place?

5. Pragmatically and realistcially speaking, what exactly does the Rudd Government intend to use to fund the A$60 Billion monies Stimulus Package, to re-vitalise and to inject into the local car manufacturing industry in the first place so as to prevent the high job loss there?

6. For your further comments and discussion, please

7. Thank you.


regards,
Kenneth KOH

 

[kum yin lau]

Hi Kenneth, Quoll is right. You'll implode your brains thinking so much.

At the end of the day, we move our money to where it'll grow the best. A la Kiyosaki, the velocity of money.

I wouldn't be buying property that returns 4% while interest rates are 7% but @ 5% interest or 7% yield, I'll be buying property again.

Alternatively, if I can get a loan @1.5% overseas, & stable rental of 4-5%, I'll buy.

The rate cuts have already slashed my interest payments by a thousand a month. Better than a pay rise. My IPs are now slightly better than neutrally geared.

Can't find property at the price that makes sense. Shares are looking more attractive.

KY

 

[Bill.L]

Hi Kenneth,

The package is $6.2 billion not $60 billion, and it is spread over quite a few years.

bye

 

[Kennethkohsg]

Hi Kenneth,

The package is $6.2 billion not $60 billion, and it is spread over quite a few years.

bye

&&&&&&&&&&&&&&&&&
Hi Bill,

You are right. It's it $6.2 Billion to be spread over 13 years time period, though it was reported in the Australian Newspapers today that "THE American owners of local Ford and Holden plants will be laughing at the Australian "suckers" who have handed them a $6.2 billion industry assistance package"

http://www.theaustralian.news.com.au/story/0,25197,24639217-2702,00.html


Cheers,
Kenneth KOH