The soft depression that we had to have

[Token Funder]

Oh dear, is that the sort of response you're resorting to now? How sad.

And why are you quoting NR's response to Keith when replying to me?

a) Seems more polite than to...well..you know...say the obvious
b) meant to quote yours and his but buggered it up.

 

[Token Funder]

Yeah westpac term deposit rate of 6% is for 60months +
4 < 5 months 5.60%
7 < 8 months 5.40%
11 < 12 months 4.50%
36 < 48 months 5.50%
60 months 6.00%

Raise cash for 3 years at 5.50%...lend for three years at 4.99%.

Hmmmmmmm

 

[Shadow]

b) meant to quote yours and his but buggered it up.

But you couldn't possibly be mistaken about this big crash we're about to have.

The above mistake is the only one you've ever made, right?

 

[Token Funder]

But you couldn't possibly be mistaken about this big crash we're about to have.

The above mistake is the only one you've ever made, right?

Quotes please.

 

[chilliaa]

Raise cash for 3 years at 5.50%...lend for three years at 4.99%.

Hmmmmmmm

On this point you do raise a pontial red flag.
Token Funder, what is your line of work. Can you go into more detail about the nature of your employment, you have started to ***** my ears.

 

[chilliaa]

hey i just noticed i got ***** instead of the word i typed, i guarantee you it wasnt a swear word, its part of a saying, but i guess in the modern world the same word can be used as a swear word.
For those that didnt know its can be used in the modern world for a part of the male body.

 

[GreatPig]

Token Funder, what is your line of work.

See here.

GP

 

[chilliaa]

Thanks Great Pig,
but i would appreciate an expanded version (of course no need to mention the financial institution).

 

[Sunfish]

Thanks Great Pig,
but i would appreciate an expanded version

Why? We know very little about you.

 

[chilliaa]

Why? We know very little about you.

Sunfish go back to sleep mate, i wasnt asking you.
Anway i thought you were leaving this forum for a while.

 

[Sunfish]

Anway i thought you were leaving this forum for a while.

I have been away for "a while" (measured on your time scale.). Aren't you happy I had a few too many reds and decided to join you? You're not very friendly, are you.

 

[GreatPig]

I'm becoming somewhat bemused that there are getting to be so many threads with the same few people arguing the same few opinions on the same topic of whether or not the economy, and housing in particular, is about to crash.

May the best (wo)man win!

Meanwhile, the economy just keeps on keeping on, blissfully unaware that its fate is being decided by a handful of Somersoftrians hidden away in this outer spiral arm of the Internet.

GP

 

[chilliaa]

I'm becoming somewhat bemused that there are getting to be so many threads with the same few people arguing the same few opinions on the same topic of whether or not the economy, and housing in particular, is about to crash.

May the best (wo)man win!

Meanwhile, the economy just keeps on keeping on, blissfully unaware that its fate is being decided by a handful of Somersoftrians hidden away in this outer spiral arm of the Internet.

GP

Haha this is the best post in this topic so far, great humour,
thanks Great Pig.

 

[keithj]

My total borrowings represent 30% of my portfolio and I set them up through trusts so you see I'm not just a pretty name .... No I don't agree the majority are safe.

It appears that you don't strongly believe that resIP will fall 40% & commIP will fall 70% - otherwise you'd have taken a different course of action with yours ?

You seem to think your going to continue to be able to wander down to your friendly banker and access that nonexistant equity you rabit on about

OK..... is the accessing undrawn equity the only risk you think people here are underestimating ? What ARE the specific risks you perceive & how have you mitigated them ?

Your tone and mentality is denial to the end good on ya keith

Erm..... you appear to misunderstand. I'm all for seeing the reality, assessing risk, reacting to likely future circumstances, and having a long term plan. I don't think I've ever denied that your scenarios have a 0% chance of ever occurring. I do place some of them in the 'less than likely' category in the time frame most here are concerned with.

The intention of my responses to your posts is to try to assess where you think the risks lie & your thought process about how we get to <insert NR prediction here> from where are are now.

 

[Token Funder]

Thanks Great Pig,
but i would appreciate an expanded version (of course no need to mention the financial institution).

I don't know how else to describe it. I run a mortgage business.

 

[chilliaa]

I don't know how else to describe it. I run a mortgage business.

Thanks mate, i always appreciate views of people who are operating in the front lines so to speak.

 

[nonrecourse]

It appears that you don't strongly believe that resIP will fall 40% & commIP will fall 70% - otherwise you'd have taken a different course of action with yours ?

We. have acted. As previously stated in earlier posts managing a portfolio of investment properties is like steering a ship. That is the inherrant nature of property it is not liquid unlike shares. It takes time and not insignificant expense to turn the ship. We sold one recently after a year of trying. We also tried to sell the jewell in the crown so to speak but the time frame of things unravelling has been about a year faster than we anticipated. We have some that are owned outright that are in our SMSF super fund and are therefore bullet proof as far as creditors are concerned.

OK..... is the accessing undrawn equity the only risk you think people here are underestimating ? What ARE the specific risks you perceive & how have you mitigated them ?

The amount of gearing that in the past was acceptable in the current enviornment inappropriate. I would also hazard to guess that most have not set themselves so that at least some of their assets are inaccessable to creditors when the perfect storm arrives. On that point we sold our family home back in 2003 and have since chosen to rent. We used some of those funds to lock away 40% of our assets and then invested the rest in better yeilding commercial property.

I started a thread about how to survive the soft depression but it went another direction. We have for over a year now looked at all our outgoings in both business and personal, have given the book-keeper the flick and will also be taking back the accounting using some of the savings to pay for specific tax advice. We have improved our record keeping joined the NTAA, and attended seminars on asset protect, SMSF tax laws, tax seminars on unit, discretionary and hybrid trusts and taken over doing all the documentation regarding trust minutes. We have also learned with the help of our solicitor to deciper loan contracts and commercial leases.

So yes we take what is happening very seriously. Like most we hope that it won't happen but our gut reaction is that we are living in dangerous times. We could see 60% of our life's labour disappear and if it does it will not be because we sat on our hands and hoped for the best

Erm..... you appear to misunderstand. I'm all for seeing the reality, assessing risk, reacting to likely future circumstances, and having a long term plan. I don't think I've ever denied that your scenarios have a 0% chance of ever occurring. I do place some of them in the 'less than likely' category in the time frame most here are concerned with.

The intention of my responses to your posts is to try to assess where you think the risks lie & your thought process about how we get to <insert NR prediction here> from where are are now.

Duty calls will get back to you with another post

 

[MichaelW]

Part of my predictions of how the soft depression would unfold earlier in the year revolved around the gradual diminuation of of capital provided by banks for business and personal borrowing. In the AFR 08.12.2008 on page 1 an article entitled Lending dries up as foreign banks quit. The article continues on page 61 in the features section. The Editorial on page 62 entitled Foreign banks leave debt hole

Merrill Lynch has reported that businesses in Australia in the next two years are now going to have to find another 58 billion that is currently provided by syndicated (multiple foreign bank) loans

So when you consider that the securitized lending that is sourced from overseas has now disappeared and traditionally 60% of housing funds in recent years come from overseas............... Where are all these SS formites that claim that they are going to make a killing when property nose dives going to source their funds from?.

The banks?

OK, you like quoting the AFR, so try this one on for size:

Editorial on p41 of todays AFR titled Global logjam keeps pressure on costs

Read past the headline and read the detail:

Westpac Banking Corporation, Australia and New Zealand Banking Group and Commonwealth Bank of Australia have completed a total of five government-backed deals this week alone.

These deals are the first bond issues by Australian banks since mid-October when the collapse of Lehman Brothers caused the near implosion of the financial system and effectively shut wholesale markets to Australian banks.

The three banks collectively raised $7.6 billion, easing strains on their reserves.

In a sign of growing investor confidence, CBA also raised $500 million of three-year debt - priced at 1.6 of a precentage point above swap - without the government guarantee.

CBA's general manager, group funding John Wechel described the domestic deals as competitively priced. He said he hoped they would play a major role in re-establishing liquidity in the Australian debt capital markets.

"We are very confident that global investors will become increasingly comfortable with purchasing guaranteed senior debt in 2009," Mr Wechel said.

The capital markets are unfreezing and investor confidence is slowly returning. You might have to factor these developments into your bullet proof forward projections for 2009/10 if you're going to maintain that perfect forecast track record. Doesn't sound much like a financial market implosion precipitating a soft depression to me. That almost happened when Lehman went under but the capital markets looked into the abyss and governments bailed them out...

Cheers,
Michael

 

[Peter 14.7]

I'm becoming somewhat bemused that there are getting to be so many threads with the same few people arguing the same few opinions on the same topic of whether or not the economy, and housing in particular, is about to crash.

May the best (wo)man win!

Meanwhile, the economy just keeps on keeping on, blissfully unaware that its fate is being decided by a handful of Somersoftrians hidden away in this outer spiral arm of the Internet.

GP

LOL!

I really did laugh. This is priceless

Kudos, Peter 14.7

 

[Token Funder]

The banks?

OK, you like quoting the AFR, so try this one on for size:

Editorial on p41 of todays AFR titled Global logjam keeps pressure on costs

Read past the headline and read the detail:





The capital markets are unfreezing and investor confidence is slowly returning. You might have to factor these developments into your bullet proof forward projections for 2009/10 if you're going to maintain that perfect forecast track record. Doesn't sound much like a financial market implosion precipitating a soft depression to me. That almost happened when Lehman went under but the capital markets looked into the abyss and governments bailed them out...

Cheers,
Michael

Michael,

Have a look at what customer rate you would need to charge for funds raised at swaps plus 1.6% and ask yourself the question how desperate for cash you would have to be to fund at that cost....just sayin'