The soft depression has arrived

[nonrecourse]

NR,

What I don't get is, what is going to cause res property to fall 50% within 12 months. You've been saying it for a while now, and NEVER provided any rational thoughts about why it will happen ? The only thing I can glean from your posts is, that it's happened elsewhere occasionally, so it MUST happen here this time. You're coming across (to me anyway ) as a religious zealot who 'just knows' it will happen, with no logical basis for your beliefs. Last year you promised to give us a detailed explanation when you had some time over Xmas - perhaps you could start a new thread and enlighten us all.

I'm not saying that it won't happen, it just appears to be one of the more extreme views that is likely to cause something as bad as the GD.

Looking forward being enlightened... Keith

Hi;

Keith if I am like a religious zealot then the blue sky brigade on this board are the Sodom and Gomorrah crowd in the Jewish biblical sense, not the homophobic Christian sense. The Jews believed God destroyed Sodom in Rabbinic writtings because the Sodomites committed economic crimes as well as blasphemy and blood shed. Keith when judgement day comes whatever you do just don't look back!

The defense on this board that with the financial depression the rest of the world is experiencing is some how going to pass us by because "things are different here" is just laughable. A few months ago this same pie in the sky SS think positive group was telling us that China was going to protect us... The recent events now point to 50 million Chinese unemployed by 2010 and Japan our largest trading partner is in free fall. This means huge social unrest in our neighbourhood.

As you know for over a year I have been warning about the soft financial depression that is coming on this board and I have taken it on the chin with my predictions most of which are still to come about. I got it right with my call that the ASX would fall to 3500 when it was around 4900 and I am being proved right about my call that the reserve bank interest rates will fall to 2% that is when the variable rates were approaching 9%. The ASX will fall to 2200 and the Aussie dollar at the bottom will be worth .38 cents. Common sense isn't very common...sorry I can't find the reference for that one either

On page 11 of the Australian Financial today the International Monetary Fund (IMF) managing director Dominique Strauss-Kahn said that the advanced economies are already in a depression and the financial crisis may get worse:

Is that the sort of proof you looking for Keith ? or shall we just dismiss him as just another economist that can't chew gum and walk at the same time?

What amuses me with the denial on my call that residential property will lose 50% of its value in the current financial tsunami is just because you haven't seen it before it can't happen; Well Keith the Europeans had their black Swan event and the somersoft gear up to the back teeth mob no matter what, are about to experience their perfect storm black swan event

Reasonable people try to get on with people even when change is necessarry because they don't want to upset other people. Unreasonable people don't concern themselves about upsetting people when change is necessary. Progress is dependent on change. Therefore all change is dependent on unreasonable people.

 

[keithj]

Keith if I am like a religious zealot then the blue sky brigade on this board are the Sodom and Gomorrah crowd in the Jewish biblical sense, not the homophobic Christian sense. The Jews believed God destroyed Sodom in Rabbinic writtings because the Sodomites committed economic crimes as well as blasphemy and blood shed. Keith when judgement day comes whatever you do just don't look back!

The defense on this board that with the financial depression the rest of the world is experiencing is some how going to pass us by because "things are different here" is just laughable. A few months ago this same pie in the sky SS think positive group was telling us that China was going to protect us... The recent events now point to 50 million Chinese unemployed by 2010 and Japan our largest trading partner is in free fall. This means huge social unrest in our neighbourhood.

As you know for over a year I have been warning about the soft financial depression that is coming on this board and I have taken it on the chin with my predictions most of which are still to come about. I got it right with my call that the ASX would fall to 3500 when it was around 4900 and I am being proved right about my call that the reserve bank interest rates will fall to 2% that is when the variable rates were approaching 9%. The ASX will fall to 2200 and the Aussie dollar at the bottom will be worth .38 cents. Common sense isn't very common...sorry I can't find the reference for that one either

On page 11 of the Australian Financial today the International Monetary Fund (IMF) managing director Dominique Strauss-Kahn said that the advanced economies are already in a depression and the financial crisis may get worse:

Is that the sort of proof you looking for Keith ? or shall we just dismiss him as just another economist that can't chew gum and walk at the same time?

What amuses me with the denial on my call that residential property will lose 50% of its value in the current financial tsunami is just because you haven't seen it before it can't happen; Well Keith the Europeans had their black Swan event and the somersoft gear up to the back teeth mob no matter what, are about to experience their perfect storm black swan event

Reasonable people try to get on with people even when change is necessarry because they don't want to upset other people. Unreasonable people don't concern themselves about upsetting people when change is necessary. Progress is dependent on change. Therefore all change is dependent on unreasonable people.

Thanks for your input NR. I was hoping for a little more the Why & How you think it will happen & a little less of the What you think is going to happen

And didn't the IMF just release a report saying the Oz Housing will be just fine ?

 

[Token Funder]

Thanks for your input NR. I was hoping for a little more the Why & How you think it will happen & a little less of the What you think is going to happen

And didn't the IMF just release a report saying the Oz Housing will be just fine ?

No, they didn't

 

[nonrecourse]

Irrational valuations

Thanks for your input NR. I was hoping for a little more the Why & How you think it will happen & a little less of the What you think is going to happen

And didn't the IMF just release a report saying the Oz Housing will be just fine ?

Think about it Keith in a world depression do you really believe that any asset class is going to be immune to irrational valuations?

 

[keithj]

The End is Nigh

No, they didn't

IMF says:Australian Housing a SURVIVOR on the World Stage

Think about it Keith in a world depression do you really believe that any asset class is going to be immune to irrational valuations?

OK... so that's a step forward. You think Oz res IP will fall 50% because the world is going into a depression.

If I held an asset that I was absolutely certain was about to lose 50-70% of it's value within 12 months I'd sell it.... wouldn't you ?

 

[Aaron Sice]

No, they didn't

just deny it!

"i don't recall"...in the famous last words of Carmen Lawrence.

why am i being lumped in with this "the blue sky brigade" just because i see opportunity? it seems you are hellbent on spreading doom and gloom without telling us WHY (that's right - WHY, not WHAT, not WHEN, but WHY).

i see low (5.00%) IRs and yields at 7% - add depreciation and it's CF+ all the way to my pocket. so what if i wear another 20% fall in price - i'm holding till my time on this rock is over and my kids can reap the benefit.

i see option prices going up up up thanks to the VIX going up up up. writing calls for easy income (and improving yield on falling dividends) and taking bear put spreads have never been more attractive. i made 300% on my NWS spread - expiring end of this month and i'm using the profit from this to pay down my mortgage and lowering my LVR further to improve my borrowing power further.

i've never been busier - EVER - in three and a half years. my business has just employed a bookkeeper and runabout because i can't keep up with the admin. i'm still yet to advertise.

Perth still has 59 cranes in the sky - the boom may be over but there aint no bust here. People are just nervous. my BIL's 4m rigging contract was up on Friday, and he checked the paper sat morning and secured another 8 week contract.

eminis are awesome at present - SO PREDICTABLE!!! i took a massive 39pip profit on friday night just by taking out 3 contracts, scaling 1 out at 4pips, the other at 8 pips and letting the last one ride the swing with my stop moved up to protect it all.

yes, awful, horrendous times are a-coming. i'm not sure when, or why, but it is, so deleverage and park all your money in cash so inflation can eat away at it. sound advice.

just to be a d**khead, i calculated that if i'd have followed your advice back in Nov and sold up and sat tight, i'd have missed out on over $45,000 worth of opportunities and lost over $100k in equity.

yet here i am. life goes on. you're bordering on having a heart attack trying to be the messiah for the four horses of the apocalypse, am i'm being a contrarian to your advice and it's never been easier for me.

i guess the difference here is that i don't care if it all goes belly up - at least i'm out there trying to make it all work - and there is ALWAYS a way to make it work, rather than listen to AM talkback nodding and grunting with the poor souls who now have to catch public transport to get to work.

yes people have been burned. yes people are gonna get burned. i don;t see sparky or ozperp jumping off a cliff - which i can assure you they would if you were out there giving advice.

opportunity reigns supreme. take advantage of it, or let "it all" just sweep you away.

someone cry me a river already.

 

[BoatBoy]

just to be a d**khead, i calculated that if i'd have followed your advice back in Nov and sold up and sat tight, i'd have missed out on over $45,000 worth of opportunities and lost over $100k in equity.


yes people have been burned. yes people are gonna get burned. i don;t see sparky or ozperp jumping off a cliff - which i can assure you they would if you were out there giving advice.

.

Yup

Are we there yet, the tipping point Q1 2008, has been and gone yet what has really changed apart from shares getting hammered and interest rates going down?

Some absolutely ridiculous high end stuff (houses) have been slammed, probably due to the above hammering on shares, but some cheaper stuff has gone up

Some jobs have been lost and new jobs have been created.

Lots of props have gone CF+, some massively so.

Apart from that I have really yet to see much evidence of all this pain and hardship the spruikers keep dishing up.

Dave

 

[Witzl]

someone cry me a river already.

I did..... when i saw Gran Tourino last night.

Man that was a good movie!

 

[boomtown]

If this is a global depression its turning out to be a pretty good party.

 

[nonrecourse]

IMF says:Australian Housing a SURVIVOR on the World Stage

OK... so that's a step forward. You think Oz res IP will fall 50% because the world is going into a depression.

If I held an asset that I was absolutely certain was about to lose 50-70% of it's value within 12 months I'd sell it.... wouldn't you ?

No Keith we wouldn't sell unless we had a better asset to exchange for it. The aussie dollar like most fiat currencies is worthless. At least with land, it doesn't disappear unlike the share market script that you can no longer use as toilet paper since the CHESS system was introduced.

I think the OZ residential property market is going to drop because of a severe world wide loss in confidence with the entire monatary system. The US reserve is bankrupt, the Europeans are in even worse shape. The entire world banking system using the fractional reserve banking template is nothing more than a ponzi scheme.

As outlined by someone else on this site the entire Chinese Shanghai stock market is backed by insolvent state enterprises for the benefit of the Communist thugs.

The so called free trade agreements have kept Europe, North America and parts of the Far East on top and have impoverished most of the 3rd world.

Most about we believe in with regard to value is an illusion. Your properties are only worth what someone is willing to pay for them. Gold is the only other alternative but you can't grow veggies on gold.

I wish none of this was true Keith and I have said it before and been sneered at on this site. Our modern financial system dates back to John Law and the Misissippi bubble.Problem is most people know nothing of our history especially financial history. That is why governments have regularly gone off the gold standard untill everything comes crashing down.

The same mistakes are made over and over. Don't you get tired of reading about people who park their brains when they go into a financial messiah and see their entire life savings disappear.

What I am on about is protecting your assets. You know a property crunch is coming and we are only arguing over the degree of the losses.

In every property asset class fundamental values are inflatted aided and abetted by our local, state and Federal governments. You only have to look at the obscene land tax imposts

 

[Aaron Sice]

No Keith we wouldn't sell unless we had a better asset to exchange for it. The aussie dollar like most fiat currencies is worthless. At least with land, it doesn't disappear unlike the share market script that you can no longer use as toilet paper since the CHESS system was introduced.

I think the OZ residential property market is going to drop because of a severe world wide loss in confidence with the entire monatary system. The US reserve is bankrupt, the Europeans are in even worse shape. The entire world banking system using the fractional reserve banking template is nothing more than a ponzi scheme.

so, don't sell, just deleverage? why not just park all our cash in offset accounts - surely if inflation eats away at cash value, it eats away at debt based on said cash value as well, yes? so we could insure ourselves that way. there's another +ve outlook to add to the ever growing list.

what if the US dump their gold? as in, they sell it when it hit $1000oz? what then? there'll be more cash in the system, and more gold. kind of an oxymoron really - because we all know what would happen then.

i'm sorry - i just can't begin to relate to your posts. theoretically, yes, you could very well be right, but the reality in the micro-economy is something else entirely.

jump on a plane and come to Perth one Thursday night. I'll take you to Karrinyup or Garden City shops - there's no lull here mate.

 

[keithj]

No Keith we wouldn't sell unless we had a better asset to exchange for it. The aussie dollar like most fiat currencies is worthless. At least with land, it doesn't disappear unlike the share market script that you can no longer use as toilet paper since the CHESS system was introduced.

I think the OZ residential property market is going to drop because of a severe world wide loss in confidence with the entire monatary system. The US reserve is bankrupt, the Europeans are in even worse shape. The entire world banking system using the fractional reserve banking template is nothing more than a ponzi scheme.

As outlined by someone else on this site the entire Chinese Shanghai stock market is backed by insolvent state enterprises for the benefit of the Communist thugs.

The so called free trade agreements have kept Europe, North America and parts of the Far East on top and have impoverished most of the 3rd world.

Most about we believe in with regard to value is an illusion. Your properties are only worth what someone is willing to pay for them. Gold is the only other alternative but you can't grow veggies on gold.

I wish none of this was true Keith and I have said it before and been sneered at on this site. Our modern financial system dates back to John Law and the Misissippi bubble.Problem is most people know nothing of our history especially financial history. That is why governments have regularly gone off the gold standard untill everything comes crashing down.

The same mistakes are made over and over. Don't you get tired of reading about people who park their brains when they go into a financial messiah and see their entire life savings disappear.

What I am on about is protecting your assets. You know a property crunch is coming and we are only arguing over the degree of the losses.

In every property asset class fundamental values are inflatted aided and abetted by our local, state and Federal governments. You only have to look at the obscene land tax imposts

Thanks for that NR.... that's the most lucid you've been regarding your thought process that leads to residential property falling by 50% within 12 months.

So if you don't value real estate or shares or gold or cash (or business?), then what do you consider to be of value (apart from happy & healthy friends & family) ? What should we be investing in ? improving our veggie growing skills ?

 

[The Y-man]

... improving our veggie growing skills ?

Rather bizzarely, that is exactly what we are doing at the moment ... the reasoning being that if it all goes down in a screaming heap, we can at least (partially?) feed ourselves.

Next problem though: weather (as in my plants all just got dry roasted over the weekend!) and water (the lack thereof...)

Cheers,

The Y-man

 

[nonrecourse]

Thanks for that NR.... that's the most lucid you've been regarding your thought process that leads to residential property falling by 50% within 12 months.

So if you don't value real estate or shares or gold or cash (or business?), then what do you consider to be of value (apart from happy & healthy friends & family) ? What should we be investing in ? improving our veggie growing skills ?

Our business feeds us, clothes us, pays for the kids education, pays the rent, funds our holidays and in the past has provided us with the deposits for the investment properties. The investment properties are where all our savings are through a diversified holding of properties with a bias with commercial. We have no shares and never will. Our super is in direct property owned, managed and controlled by us.

Our health and children are number one, everything else is window dressing. We come into the world with nothing and hopefully when we die we will leave two human beings who are better people they we were full stop.

We don't understand why anyone would commit suicide because they lost all their money. Anyone who does sadly is mentally ill.

 

[Token Funder]

And didn't the IMF just release a report saying the Oz Housing will be just fine ?

It appears we simply have different interpretations of "will be just fine".

I don't consider faring better than the UK, Ireland, Iceland, Spain or the US as just fine, much in the same way that I don't consider the fact that "our" recession won't be as bad as the US situation as support for the proposition that our economy "will be just fine".

AUSTRALIA may be heading into recession but its housing market will fare much better than other countries, the International Monetary Fund says.
Unlike property markets in the US and Europe, which have experienced 40 per cent drops in prices as the housing bubble is pr1cked, Australia is not suffering from the same magnitude of inflated house prices

 

[keithj]

If things get really bad.....

Rather bizzarely, that is exactly what we are doing at the moment ... the reasoning being that if it all goes down in a screaming heap, we can at least (partially?) feed ourselves.

I was being serious about the veggies.... our tiny herb garden is expanding rapidly, to include veggies & fruit.

I'm a bit surprised that NR hasn't mentioned his own sewerage system, a years supply of rainwater storage, an acre under veggie cultivation, orchard, solar panels, a cellar full of supplies, slow combustion heater & infinite supply of firewood and a bunch of like minded neighbors. If things really do get as bad as he's expecting.... then in 12 months his 80% LVR won't be much use to feed or keep him warm.

 

[keithj]

It appears we simply have different interpretations of "will be just fine".

NR said the IMF boss 'proved his point' that we're already in a depression. Two weeks earlier the IMF categorically said that Oz res IP would not be falling 40%. NR appears to seek confirmation of his biases from the IMF.

 

[keithj]

Our business feeds us, clothes us, pays for the kids education, pays the rent, funds our holidays and in the past has provided us with the deposits for the investment properties.

OK, so you currently like business - what about in the impending depression ?

The investment properties are where all our savings are through a diversified holding of properties with a bias with commercial.

Why are you still holding them if you're absolutely sure they're going down 50-70% ?

We have no shares and never will. Our super is in direct property owned, managed and controlled by us.

OK.

Our health and children are number one, everything else is window dressing. We come into the world with nothing and hopefully when we die we will leave two human beings who are better people they we were full stop.

OK

So what should we be investing in ? property ? cash ? shares ? gold ? commods ? bonds ?

 

[nonrecourse]

OK, so you currently like business - what about in the impending depression

Why are you still holding them if you're absolutely sure they're going down 50-70% ?

OK.

OK

So what should we be investing in ? property ? cash ? shares ? gold ? commods ? bonds ?

Without giving too much personal detail away our business even in a depression would survive though with deflation would mean a significant drop in income. We have prepared for that by my wife going back to work part time that could be full time in a safe government job.

I thought my explanation about our fiat currency made it clear even if the properties drop 50% holding them provided your gearing is at 30% or less now is a better option. Again with out divulging too much most of our commercial properties are again in that same field that in a depression will survive.

At this late stage if your not at or below 30% if you have a blue chip property that would sell in our depressed market then you may be able to hold onto the rest of your portfolio. Rather than investing in something else why not pay down some of your mortgages so that even if you do have a period where your property is empty you have a reserve.

Are you a long term investor or a speculator?

 

[Token Funder]

NR said the IMF boss 'proved his point' that we're already in a depression. Two weeks earlier the IMF categorically said that Oz res IP would not be falling 40%. NR appears to seek confirmation of his biases from the IMF.

..and no-one else does?

For example, "better than the US and Europe" could be 20% in real terms over the next 2 years, could it not? What they are clearly not saying is "it will be fine".

Recessions are not good things.