Reply: 2.1
From: Mike TheBloodyIdiot
Colin,
Sorry, I am definitely not as bright as yourself and I am really confused.
Can you please clarify where you stand. Thing is that statements "development industry goes down the toilet"
and "Macfarlane is not just jawboning" are mutually exclusive.
I seem to gather that you have 7 figure IP portfolio. Would it be fair to assume that you read an API magazine?
If yes, I would assume that you have read this marvellous article about how GDP and "new dwelling commencements" are tied together.
I take a liberty to remind you Sir - GDP goes right where development industry goes, only difference is 3 months delay.
Besides, development industry does not even need interest rate rise - it is already in the toilet.
For the last two years it lived on a borrowed time, being fed by artificially inflated demand of pre-GST building boom and First Home Building Grant.
FHBG has 24 more days to go, and after that new dwelling market will go into the mode of absorbing excess stock.
Apart from that, insurance crisis does not help at all. In these conditions rate rises deliver fatal blow which sends the industry deep down the sewerage.
On the subject of Macfarlane - I do not know what you have heard from his speech, but to me it sounded like this:
"... Even a child understands that for the economy to feel the influence of rate movements no less than 12-18 months is needed...
Hence, by changing directions in rate movements every 6 months we admit that RBA is totally lost as to where economy goes and recognise our total inability to correctly interpret economic data..."
"...Having an excellent record in misinterpreting economic indicators RBA demonstrates an absolute commitment to follow this path.
We completely ignore that:
a. Consumer confidence surge is a result of artificial influx of inflationary money caused by FHOG/FHBG ($14K after tax~->$28K before tax~->nearly average annual wages)
and a waterfall of corporate collapses/retrenchements happened just before Christmas. People were spending their retrenchment money without realising there is no jobs out there.
b. Strong job figures are the product of erosion of full time jobs in favour of surrogate part time and casual ones
c. Building approval surge in March quarter flows mainly from application submitted before Christmas which have very little chance to materialise in present conditions
d. Surging dollar will kill exports in a blink of an eye and stimulate imports, causing further imbalance to National Accounts
e. Level of household debt is at 120% so any careless rate rise can send economy into tailspin before we even know it
f. US economy is seriously sick, and it is only matter of time when we start to feel the same symptoms..."
If you tired to read my delirious findings, read this:
http://www.smh.com.au/articles/2002/06/05/1022982720732.html
and this:
http://www.smh.com.au/articles/2002/06/05/1022982720727.html
(just keep in mind that i do not subscribe to an idiotic notion that "people will stop purchasing houses and again return to retail consumption")
and this:
http://finance.news.com.au/common/story_page/0,4057,4458889%255E462,00.html
(if you have troubles opening this one, it is under "HOME > FINANCE > STORY> Small firms fear double hit ")
Cheers,
Mike - self deluded idiot