Forum Replies Created
I’m glad you said buying gold from ABC in Sydney worked out for you, I was thinking of doing the same soon. With the $AUD higher than the $US gold is actually declining in $AUD terms ie gold in $AUD is $1,414 and $US $1,515.
I understand the $AUD won’t keep going on this trajectory. Our RBA may intervene sooner or later.
After the financial crisis i wanted to know how someone in the US, not paying their mortgage loan, put my colleagues out of work.
I stumbled across CM’s site which enlightened me to the storm on the horizon outlined in the 3 ‘E’s. I also found the CM site was way ahead of the curve in many respects and may not be relevant at the same time in Australia. (I’m talking years) So I had to take it back a few notches and find sites relevant to the current timing for Australia.
Also our PM Rudd at the time of the financial crisis threw so much money at the ‘people’ with first home grants and school hall construction together with the RBA cutting interest rates placed Australia on a different path. But effectively all this did was ‘kick the can down the road’ as our home prices are artificially propped up.
The US threw the money at the banks and it didn’t work.
This site is like a looking glass into the future if Australia follows the same route……so far I think we are, but on a smaller scale. Our personal debt to GDP is actually higher than the US at the present moment. (Thanks Steve Keen for that info).
The only reason we are not following the US is because of our ‘dirt’, and China and India want gobs of it. This won’t last long as other players enter the field. We are just a quarry for these nations.
Sites with more of an Australian focus and tuned to our position with housing and resources to China.
Steve Keens ‘Roving Cavaliers of Credit’ is an absolute must read. Was my penny drop moment. The system runs on credit not paper money. Theirs a big difference when discussing inflation / deflation.
FWIW, here’s my quick take on the Oz position and our relationship with China.
- Housing is in a bubble, particularly Sydney where i live. However strangely enough the poor planning system here limiting supply will soften the blow. Although that didn’t stop UK house prices falling.
- Banks can fail and the BOQ and NAB need to be watched. NAB was the most exposed during the financial crisis purchasing US banks and subprime loans prior to the crisis. They were the recipients of ‘Timberwolf’ sold by JP Morgan (or Goldman can’t remember).
- Banks have created a ‘squeeze play’ at the moment, ie no more money for developers to develop new stock while maintaining their own asset. Their assets are your mortgage debt.
- IMO the RBA won’t cut or raise rates at the moment. Cutting rates means the $AUD will fall and Australia will feel the effects of higher inflationary costs as the $AUD has been floating higher then the $US. At the moment we are partially shielded.
- China overall will be the player overtaking the US in say 5 years (no one knows). China’s primary market is Europe not the US. That’s why you will find China actively supporting European countries ensuring that market stays afloat and actively buying sovereign bonds.
- China is stimulating their economy by artificial means and their housing supply is also in a bubble. The Chinese Government is putting measures in place, limiting lending quotas, raising interest rates, limiting investor ownership of properties etc to cool the market down…………..Its working.
- Our country is reliant more on China’s construction boom which is now declining (29% in Shanghai). This does spell trouble for Australia..…Interim trouble only. The Chinese will look at falling house prices as a buying opportunity.
- The Chinese will not raise their currency and shouldn’t either…Not yet. They are developing and expanding the middle class first before this can be done. China is heading into consumerism.Shear weight of numbers is hard to compete against.
- The US population of 300million is a rounding number for the Chinese 1.3billion people growing into a middle class will turn China into a powerhouse. (25% retiring US baby boomers in the next 15 years doesn’t help)
- I’ve heard all the doom on China and how Chinese population can’t afford homes etc, Then how this week does the Chinese overtake the US on vehicle ownership. Shear weight of numbers. With any nation growing the will have pitfalls, I tend to think of them as growing pains.
- China is also leading the technology and the race for full electric vehicles. In some ways having a authoritive Government mandating regulation makes it easier to transition into that new world without fossil fuels.
Sorry for the length, but that’s my take.
Australia only foreseeable trouble will be a 30% fall in house prices and long overdue. The banks have already priced it in.
Remember, 30% rent, no mortgage, 30% own their own home, no mortgage, 30% with a mortgage of which half have paid off. The people that will hurt the most are the First Home Buyers that the Government screwed…Don’t expect fireworks.
All the best
Love the expression with the headline.
I’m sure i’ve seen a similar article printed from the early 1900’s, except it was the US saying the same to the Brits.
Wasn’t this used as financial warfare? Hhhmm