Rory vs Keen on Switzer

they shouldn't have chose keen to face rory or rory to face keen, a speculator/trader like rory against an economist. I don't find rory argument very interesting, he is a speculator and he is much better if he doesn't know much about fundamental or economic history or, if he knows about economy he is much better not think about it and go along with market trend and not try to fight it. He seems good in doing that and he is right to be optimistic in this market. I am sure he would flip side weather outlook change (short term outlok).
I like rory saying that there are 2 type of talking heads: those who don't know and those who don't know they don't know. Some don't know with great confidence, but we should mark everyone's assessments to market. but he shouldn't bet against SK as would imply he would know better (specially in long term)...he is right also in saying there are bigger factor in play then just debt/gdp ratio. his answer is just give up on understanding it and get along with markets, steve answer (economist answer) would be to incorporate all information and data and try to come up with a model and a predictabe outcome, but none has never manage to do it in economy and it is more likely will stay like that.
 
I thought Rory was pretty soft on the academic front. He just sidestepped the discussion on debt to GDP and attacked Keen's wrong forecasts over the last 12 months. 12 months is nothing in the world of economics. Rory comes across to me as just a short term trader type.

Rory's worst line was that people in Australia only borrow to buy a house. What nonsense. The debt is secured by housing but it certainly isn't spent on housing. We don't build much.
 
Rory's worst line was that people in Australia only borrow to buy a house. What nonsense. The debt is secured by housing but it certainly isn't spent on housing. We don't build much.

you don't have to spend money in building new housing.
overall the value of australian homes is around 4 tril$, it was probably 2 tril$ few years ago, where do you think the 2 extra tril$ are coming from? i guess some from inflation but one good tril$ from debt...
 
you don't have to spend money in building new housing.
overall the value of australian homes is around 4 tril$, it was probably 2 tril$ few years ago, where do you think the 2 extra tril$ are coming from? i guess some from inflation but one good tril$ from debt...

I'm not disputing where it is coming from (debt) - I am disputing where it is going! Lots of pools, renos, 4WDs, holidays etc etc. "equity mate!"
 
I'm not disputing where it is coming from (debt) - I am disputing where it is going! Lots of pools, renos, 4WDs, holidays etc etc. "equity mate!"

ok, I see what you mean...

You can probably get also an idea on where the money is going from the % of gdp that is coing from consumption, we are not as high as USA (pre GFC I think they got to 70%) but still one of the highest of western world.
Probably Rory is stll right about the love of australian to get into debt to buy houses as I have been around the world a bit and flipping houses like in australia is not a common sport. I think on average in australia we change home every 5 or so years, we would be close to the top of the world on that.
 
you don't have to spend money in building new housing.
overall the value of australian homes is around 4 tril$, it was probably 2 tril$ few years ago, where do you think the 2 extra tril$ are coming from? i guess some from inflation but one good tril$ from debt...

It's not coming from anywhere - it doesn't exist! You can't extrapolate what the last person paid for the last house to that being what the whole market would be worth if you liquidated it all at once! There are a few million who have spent a lot to buy their property and many millions more who are just sitting on a property that cost them very little and would be worth a lot if they decided to cash in one day. You can't extrapolate what the minority is doing to say the majority is over leveraged / paid too much etc.

On this one I pay attention to the track record of each player. One is an academic who obviously doesn't have much in the way of net worth. Another works for and would have heavily influenced decisions within one of the most successful Australian companies of the last decade or two. I wouldn't mind betting his net worth is pretty substantial in the scheme of things. I know which one I pay attention to! Even if he is talking his book...
 
On this one I pay attention to the track record of each player. One is an academic who obviously doesn't have much in the way of net worth. Another works for and would have heavily influenced decisions within one of the most successful Australian companies of the last decade or two. I wouldn't mind betting his net worth is pretty substantial in the scheme of things. I know which one I pay attention to! Even if he is talking his book...
You judge people's smarts by their net worth!!!?? And you think Macquarie is a successful Australian company!!!!???? I had to throw my head sideways to avoid throwing up on the keyboard! :eek::eek:
 
It's not coming from anywhere - it doesn't exist! You can't extrapolate what the last person paid for the last house to that being what the whole market would be worth if you liquidated it all at once! There are a few million who have spent a lot to buy their property and many millions more who are just sitting on a property that cost them very little and would be worth a lot if they decided to cash in one day. You can't extrapolate what the minority is doing to say the majority is over leveraged / paid too much etc.
You are right - what you are saying is prices are set at the margin.

Based on those prices at the margin other people who weren't at the margin felt richer and borrowed against the house to buy things.
 
It's not coming from anywhere - it doesn't exist! You can't extrapolate what the last person paid for the last house to that being what the whole market would be worth if you liquidated it all at once! There are a few million who have spent a lot to buy their property and many millions more who are just sitting on a property that cost them very little and would be worth a lot if they decided to cash in one day. You can't extrapolate what the minority is doing to say the majority is over leveraged / paid too much etc.
Yieldmatters is right on this one, when the average australian flip the house over to buy another one every 5 or so years do you think that the value doesn't matter? is it there or not? it matters and the money is there in the way that will set the deposit for the next home and set the max borrowing and set the amount of several deposit weather he buys several investment property


On this one I pay attention to the track record of each player. One is an academic who obviously doesn't have much in the way of net worth. Another works for and would have heavily influenced decisions within one of the most successful Australian companies of the last decade or two. I wouldn't mind betting his net worth is pretty substantial in the scheme of things. I know which one I pay attention to! Even if he is talking his book...
good, you invest in homes following the short term speculator strategy and his market view and his ignorance about economy, may be you follow Warren Buffett as well...hang on, his strategy is different then Rory :eek:
About macquarie, I'll put it in the top 10 big australian company that can go bust in the next 10 years (and in my opinion was very close to get bust last summer). but I admit that if markets goes up they'll outperform the other majors.
 
You judge people's smarts by their net worth!!!?? And you think Macquarie is a successful Australian company!!!!???? I had to throw my head sideways to avoid throwing up on the keyboard! :eek::eek:

I didn't say I judge people on their net worth. What I do is put more credence in the financial opinions of people who have demonstrated their financial performance. Past performance may be no guarantee of future performance but it sure is a better indicator than the alternative!

And yes, Macquarie has been a very successful Australian company for its shareholders (those are the people who count in this measure). Its strength has been demonstrated only recently in a test those that tried to copy it failed abysmally (BNB, Allco etc). When the tide went out we could see Macquarie actually had their bathers on the whole time, unlike some!
 
Based on those prices at the margin other people who weren't at the margin felt richer and borrowed against the house to buy things.

There was a time way back when this seemed popular but I haven't seen this type of behaviour for quite some time now. People borrowing against the house for their business / shares etc yes but not for consumer goods on a large scale. IME the mortgage generally gets left alone by the vast majority of the population.

I see all around me people with massive borrowing capacity that they just don't utilise because they are too afraid to lose any money whatsoever.
 
I didn't say I judge people on their net worth. What I do is put more credence in the financial opinions of people who have demonstrated their financial performance. Past performance may be no guarantee of future performance but it sure is a better indicator than the alternative!
I'd see it in reverse. If somebody knows enough to make money trading why would they tell you how they do it?

And yes, Macquarie has been a very successful Australian company for its shareholders (those are the people who count in this measure). Its strength has been demonstrated only recently in a test those that tried to copy it failed abysmally (BNB, Allco etc). When the tide went out we could see Macquarie actually had their bathers on the whole time, unlike some!
This isn't the case. They were effectively bailed out by the government - they were very heavy users of the government guarantee on wholesale markets.
 
I'd see it in reverse. If somebody knows enough to make money trading why would they tell you how they do it?

Well, I do. That's what this whole forum is about. Those with a bit of experience and success in the game sharing ideas and in turn helping out those coming behind, while trying to learn some snippets from the others way out in front. My financial position has benefited immensely from the ideas I have learnt on this forum. We aren't all selfish, anti-social people hoarding all the ideas for ourselves...

This isn't the case. They were effectively bailed out by the government - they were very heavy users of the government guarantee on wholesale markets.

This is the case. They may not have predicted the complete freezing up of debt markets but it was reasonable to assume that in the event that happened governments around the world would step in to shore up the availability of capital. To assume otherwise seems quite unreasonable to me, especially in hindsight! It's all part of their success...


Sorry, I can't help it - my Italian heritage is responsible! :p
 
This isn't the case. They were effectively bailed out by the government - they were very heavy users of the government guarantee on wholesale markets.
here it is

The five Australian banks each appear in the top 20 of issuers of government guaranteed bonds around the world
The biggest Australian user of government guaranteed debt among global rivals is tenth-placed Westpac with US$21.7 billion issued since October, according to figures compiled by Dealogic.

Commonwealth Bank comes in at number 13 with nearly US$20 billion on issue, followed by National Australia Bank at 15 and ANZ at 16th spot.

Macquarie Group, which has a credit rating one notch below the big banks, makes it as the 20th biggest user, issuing nearly US$11.6 billion in government guaranteed debt since October.
 

We all know that govt will help out the economy; to help the unemployed, the under utilitsed productive sectors, the big employing sectors and this includes ensuring that liquidity from the banks is available for the economy to continue humming along. It seems Keen's mistake is to extrapolate the outcome of the Depression which was a result of lack of Keynesian economic application of the time. Rory just came out better as govt tries to out perform recent economic performances in the last 20 years and not replicate the outcome of the worst of 50 years of government experience.

Can we give this debate a break, both apologists for SK and banner raiser for RR. The outcome of each person's forecasts speak for themselves. Follow whoever you like, just don't hog the forum with your theory unless it benefits the objectives of this forum.

I assume the objectives are for fellow minded PI to learn from each other in their joint purpose to secure for their future, primarily with IPs because they do not have sufficient knowhow to invest in shares and other investment vehicles, to benefit themselves, loved ones and society? :D:)
 
This is the case. They may not have predicted the complete freezing up of debt markets but it was reasonable to assume that in the event that happened governments around the world would step in to shore up the availability of capital. To assume otherwise seems quite unreasonable to me, especially in hindsight! It's all part of their success...

About Macquaire, there is a great point made by volcker on banks and other entityies like investment banks and hedbe funds:
“If they get big enough, then they’re going to need capital requirements and leverage requirements,” Volcker said. “But I don’t think that’s going to be many firms. I’d like to create the impression, to the extent you can, that there’s no automatic bailout of those institutions.”

Volcker said he has a different “regulatory philosophy” than the Treasury Department. Banks, he said, provide basic financial services, including payments and credit, and should have some government protection and support.

Hedge funds, private equity, and proprietary trading are different businesses, Volcker said, and should be kept separate from banking. He cited Goldman Sachs Group Inc., which became a bank holding company last September, took government aid, and yet has a large proprietary trading operation that is responsible for much of its profit.

There’s nothing wrong with making money,” Volcker said. “But I don’t want them to make money by taking risks with the support of the taxpayer.”
link
 
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