Tales of woe from People I know.

[sash]

...don't forget the Future Fund, our super, plus another $12 b surplus....to implement a Australian style "New Deal".

Also, our banks are already ensuring that they are only credit to rock solid people.

Cheers
Sash

With 0% interest rates, the whole investment scene changes. It points to a weak economy (eg Japan) that has no slack to go if it suddenly gets worse! Australia's high interest rate to date means that at least we can have some strategies in place (eg by reducing interest rates somewhat) but what do you do when you are already at the bottom! If you look at the big picture, if we do get 0 interest then that is really scary. While an individual might be prepared, when everything else is kinda crumbling then does that really matter?

 

[willair]

I remember the last recession quite well.
Several pateints in the last month have come in with tales of woe of loosing half their superannuation.

I also sometimes think back to the early 1990's and what happened during that period,i know people from both sides of the fence,Dentists-Doctors and Plumbers-Builders-Labourers all have been hits in several ways,the dentists and doctors all seem overworked to me,while the builders-and plumbers-sparkies- carpenters all now seem to be lowering their quotes just to keep food on the table,and pay the normal day to day costs but this has been happening for over one year now,maybe the general public are just starting to wake up when their super funds balance paper come out of the blue in the post, was talking to a mate who does bathrooms last night up too about 6 weeks ago the sky was the limit in bathroom reno's,now he has about one job to finish so he is worried,plus the fact he has been done over by several builders who hit the wall and left the country,but last night he said after several burbons-beer that for some reason that he can't see why everything has just come to a complete
standstill over the past few weeks,several-everybody has just stop spending unless it's to buy food or petrol in the car,..

The only item that stands out to me is one thing , every morning i do several dropoff for my family,work school uni all close to where our brisbane homebase ,and what i can't understand is the less amount of cars that are now not on the road in the morning,maybe 30% less people are driving to work-or 30% don't have a job anymore and stay at home ..imho after the big christmas spendup now that everybody is cashed up from MrRudd with his buy your vote and bend over free money plan the S--- is going to hit the fan in the same way it hit all those years ago it is no different just the numbers........
willair..

 

[GoAnna!]

The average person I speak to every week seems relatively oblivious to the effect the world financial market might have on their lives. When I have brought it up as a topic some have even asked if I think it will have any effect in Australia. Then again some of them with solid employment may just float on through apart from losses in super. They have been selling PPORs (and getting the price they expected) and looking for houses to buy. No mention of job losses so far. A little frustrated will lack of quality housing available to buy. Many cycle to work and some grow vegies and have chooks. They are not big consumers.

The difference I have noticed is in the local businesses. Cafes are quieter. In busy shopping strips shops have become vacant and not been filled. One medical centre has been vacant now since last December. One shop has been sold twice with no tenant in sight.

We made the decision last year not to sell down any properties. Time will tell if that is the right decision. We have always been focused on yields and we will continue to over the next few years. We will do a small number of renovations.

Employment wise we feel relatively secure and with our yougest starting kinder next year I could return to the workforce if need be. Currently I am just focusing on keeping our financial position as healthy as possible. We have always worked on our investments being self sustaining but if things came down to the wire we could put some of our own money in to prop things up.

My super statements are not attractive because I did not change the mix when I should have (focus was elsewhere) but I can live with that especially given we are so far from being able to access that money.

The other small change I have noticed is less junk mail from shops. Those glossy magazine type advertising. Is that budget cutting?

 

[marg4000]

I am in Brisbane and can't say I have seen any evidence yet of a slowdown.

We were at a large suburban shopping centre last Thursday night, the food court was jam packed with people eating dinner, the checkouts at the shops had queues and we could hardly get a car park.

I lived through the 1990s "recession we had to have" and so far have seen no evidence that this is anywhere near as bad.

We started going conservative in our super about a year ago and gradually converted until we were solely in cash a couple of months ago. Maximum loss was about 5%-8%. Most of our friends acted in a similar manner. Mind you, we are in our fifties so took that into account when making our decisions.

There must be an awful lot we are NOT being told given the $10 bil handouts coming soon and the inflationary impact they will have.
Marg

 

[Pushka]

There must be an awful lot we are NOT being told given the $10 bil handouts coming soon and the inflationary impact they will have.
Marg

I think it is the 'what are they NOT telling us" that has everyone, including the share market, on edge.

Rudd went from a stand of 'not going to give the pensioners anything until the tax review in '09', to a full on 10billion free for all.

So what changed his mind? What does he know that we don't!

 

[Token Funder]

I am seeing things slightly different here in Brisbane SeeChange.

Most of my smarter friends have been burnt badly....CEOs, CFOs, ex trade commissioner to UK, Directors of large public companies. It's mainly their super and retirement plans that have been scorched......and several keep complaining about margin calls.

However, no one I know up here has been talking deep and long recession or depression for Australia.....most are talking a light to moderate 12-18mths recession. Whereas I am open to 10 years of significant asset deflation and don't rule out depression.

This week we had the Premier and one of her better ministers saying Qld property was going to get hit. This is the first time they've said anything like that.

I've been listening to Steve Keen, Daily Reckoning, Kohler and Gotliebsen and a lot of US commentary for the last 18-24 mths, and adopted their strong bearish sentiment. My views on the risks of debt delevering and the small likelihood of Aust/China decoupling from the USA haven't carried much weight with them over that time.

It has been a real eye opener for me in how little some of these guys read about things global. And none of them want to listen to anyone who talks dim about the future.....Steve Keen makes some valid points, as did some of the guys from GHPC on the forum, but the level of repulsion towards their views by many forumites has not been helpful. No one likes bad news I suppose.


Most people I know still think Brissy property is safe. I've been caught with a little exposure....I have a lot I am trying to sell now....two appraisals in Feb this year at over 230k. I have it advertised for 199, whereas similar lots are all above 215k. I'd let it go for 170k today, because I believe the market is going to be swamped with listings in the coming months...and there'll be few people willing to buy......they'll just wait and wait.....which is how Japanese prices were forced down, even with a cash rate close to zero.

I think most Australians and forumites refuse to entertain property deflating more than 10-15% over the next 5 years.

The one thing I have learnt though is to take everything private companies (especially Aussie major banks), the RBA, and govt say about what is going on, with a grain of salt.....Their first duty is to ensure their survival and protect the system, which means trying to uphold confidence, even when their analysis and advisors refuse to entertain any non neo Keynsian interpretation. I have been vindicated in doing my own research.

Though your politics scare me (jeez..you make Ghengis Khan look like a Fabian ), regrettably you're one of the few posters on this forum who appears to read anything more than that which reinforces their belief system.

I've been at the pointy end this crisis since the first week of August last year and to read the number of heavily geared punters bank on about somehow Oz was immune from what was going on was, frankly, terrifying.

Given I manage a couple of $B in debt secured against property, it's fair to say I have a fair degree of interest

As a consequence, I am hardly anti-property and pro-shares.

Had both, all sold now bar a few shares I am precluded from trading. All debt including the PPOR paid off, $20K in the bank and sitting tight until I have some confidence as to where the world will settle.

No-one can predict the future. All you can do is assess the facts as they are presented, not as you would like them to be, and make your decisions on the balance of the probabilities.

The future has looked very poor for 18 months, though it seems it is only now that people are realising that sucking trillions of dollars out of the global financial system and the fairly predictable consequences may impact on their day-to-day.

And anyone thinking 0% interest rates is a good thing clearly has no idea of the economic dire straits an economy would need to be fcing before a central bank would consider such a thing. If cash rates make 3.X% in the next 12 months it is because the real economy is imploding.

 

[Pushka]

And anyone thinking 0% interest rates is a good thing clearly has no idea of the economic dire straits an economy would need to be fcing before a central bank would consider such a thing. If cash rates make 3.X% in the next 12 months it is because the real economy is imploding.

Exactly. Having said that I think that SA might not experience such a crisis as the rest of Australia, simply because we haven't seen the dramatic increase as elsewhere. So less to fall; land incredibly tight etc.

 

[MarkandTina]

I think a few people need to stop and think about how the current situation really affects our society.

If you are over 55 and the value of your super has dropped, ok you have reason to be nervous.

If you depend on the interest on the cash in your bank you might not be happy about the lower rates.

The majority of people I talk to are middle class working Aussies who know what happens in their super account probably wont affect where it will be in 10+ years.
They are really happy that interest rates are dropping so either: a) their mortgage is lower or b) houses are more affordable. The b's are concerned though that prices will rise, in particular as we get closer and closer to June 30 2009 and pressure mounts to buy that house or miss out on the extra grant.

Currently those heavily into shares or focused on super or bank interest have their concerns, but those I've talked to about property really dont seem to care, as one workmate said to me yesterday "I'm still going to enjoy a few beers tomorrow like I did last weekend".

Whether we have a recession or not will be decided by the sentiment of our middle classes, I'm sure we could talk ourselves into having one if we really tried, but what would happen if the media called recession and everyone ignored it and kept spending, I guess it wouldnt happen.

 

[Token Funder]

Whether we have a recession or not will be decided by the sentiment of our middle classes, I'm sure we could talk ourselves into having one if we really tried, but what would happen if the media called recession and everyone ignored it and kept spending, I guess it wouldnt happen.

Keating actually got it right...in the absence of a gentler alternative, sometimes a recession is the best thing for an economy. If Greenspan had been prepared to allow the US economy to slow and wasn't so prepared to turn a blind eye to the debt binge that occured under his watch, the US might not be looking at the hard landing that appears to be the most likely outcome at the moment.

If the only way consumption in Australia can be maintained is on the back of further debt...then growth should be allowed to slow. Better to take the medicine now than have a nastier event down the track.

 

[sash]

Yep, in small business.... advertising gets the chop first...ironic isn't it?

The other small change I have noticed is less junk mail from shops. Those glossy magazine type advertising. Is that budget cutting?

 

[Dis]

Yep, those people excited about 0% shouldnt be investing in the first place because they dont understand what that actually means.....

Australia's experience going forward will be the average of all its citizen's. Some people will find themselves at the pointy end of this recession while others will not be affected as much.

In my own little world I really cant see much change except for the paper losses on my super / shares. If anything cashflows are improving (lower interest rates, higher rents). Plans really haven't changed.

As far as investing goes, I'm more comfortable investing in things when we aren't at the top of a cycle.

 

[see_change]

Now the gossip channel;s have had their chance to do a bit more work it seems that 6 of the dad's who attended the dinner have been retrenched.

As well , one of the major investment banks was in danger untill the govt came in with their guarantee. Maybe the political connections that bank has been buying over the last few years have paid off.

Cliff

 

[oldjonesy]

I also sometimes think back to the early 1990's and what happened during that period,i know people from both sides of the fence,Dentists-Doctors and Plumbers-Builders-Labourers all have been hits in several ways,the dentists and doctors all seem overworked to me,while the builders-and plumbers-sparkies- carpenters all now seem to be lowering their quotes just to keep food on the table,and pay the normal day to day costs but this has been happening for over one year now,maybe the general public are just starting to wake up when their super funds balance paper come out of the blue in the post, was talking to a mate who does bathrooms last night up too about 6 weeks ago the sky was the limit in bathroom reno's,now he has about one job to finish so he is worried,plus the fact he has been done over by several builders who hit the wall and left the country,but last night he said after several burbons-beer that for some reason that he can't see why everything has just come to a complete
standstill over the past few weeks,several-everybody has just stop spending unless it's to buy food or petrol in the car,..

Thats very interesting. We have a plumber working on our house and always we have to chase him with many phone calls to get him to come out.

This week we get a knock on the door and its the plumber, all bright eyed, wanting to know the 'status' of our 'reno' and if we had any work for him, wants to put a sign out the front, and had an invoice in hand for work that he 'forgot' to issue before.

He even phoned me the next day to confirm he would be out on Monday. He NEVER phones me, its always me phoning him.

 

[boomtown]

Ive never seen a redundancy before (and Ive been working for 8 years now). I saw someone made redundant last week. Troubled times indeed.

 

[Pushka]

Hey Boomtown, I have seen many retrenchments over the years, we work with a number of private companies though, so I guess we have 'exposure' to what happens in the real world, but never makes it to the media. And I guess I have been around a little longer than 8 years
Does anyone else get very cranky when we hear an American accent 'expert' on the radio telling us not to panic? I just heard one on the radio news, after the fall again on Wall Street. yeah, right, as if we would listen to any American right now....

 

[Sunfish]

At times like these you need to be very selective about who you listen too. Industry insiders will say what is best for the industry not our financial health.

I listened to Don Coxe's netcast today and while he admits to having misread the signs, he did at least see them and his voice of reason helps calm the nerves. What he says about Canada could be just as true about Aus. If these guys interest you combine his name with BMO Nesbitt Burns in a search.

 

[BoatBoy]

Thanks for that SF, had a listen to the 58 minute talk and interesting stuff thats for sure.

With things going the way they are, i should soon be able to get some help in on my boat, now that people realise they really aren't rich enough and really don't need a million dollar plus Maritimo, Rivierra or whatever else takes their fancy marine wise.

The above companies and others have laid of plenty of staff so there should be some blokes looking for work again soon enough.

Those $10/hour monkey boys from a few years back, that became overnight legends and jammed their rates up to $30/hour plus for cash, should once again become monkey boys.

Glad I didnt buckle to their pressure and just put the project on hold for a while.

Monkey boys that are prepared to sweat blood, can count to 3 and keep up with me, call Dave on (555)328 7448 not a real number

Welcome back to boatbuilding how it used to be lads.
Crap conditions and crap pay but sailing on Wednesday arvos and rum at the end of every day.

Dave

 

[plusnq]

Hi SF

Thanks for that. Good link and there are definite correlations with Canada beinga commodity currency.

Cheers

Shane

 

[XBenX]

Surely Somersoft hasnt resorted to quoting washed up academics.

I thought the Economics forum was about questioning the logic of media hungry types such as these guys.

*XBenX opens his $XX,XXX BIS long term forecast report - unusually mild and extended monetary tightening - oops.

 

[Sunfish]

Surely Somersoft hasnt resorted to quoting washed up academics.

"Somersoft" hasn't quoted anyone. The gentleman I referenced doesn't fit this description. What prompted this outpouring?