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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...
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!"
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 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!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 are right - what you are saying is prices are set at the margin.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.
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 RoryIt'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...
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!
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.
I'd see it in reverse. If somebody knows enough to make money trading why would they tell you how they do it?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!
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.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!
I'd see it in reverse. If somebody knows enough to make money trading why would they tell you how they do it?
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.
check this out guys.... http://www.somersoft.com/forums/showthread.php?t=55713
here it isThis isn't the case. They were effectively bailed out by the government - they were very heavy users of the government guarantee on wholesale markets.
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.
here it is
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...
“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.”
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