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Bulls gone AWOL, a sign the game is up? They've seen the writing on the wall?
Topic Started: 7 May 2014, 11:25 AM (19,782 Views)
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Dr Watson
14 Oct 2014, 08:49 AM
Really? I don't think we're even remotely close. Public debt-to-GDP can continue rising for years to come. (Not a good thing, by the way, but it's the path our policymakers have chosen and we need to base our investment decisions around it.) When we do reach that tipping point, that moment of "we're maxed out", we'll have some challenges, but it might be another decade away or even longer. Actually, I think a recession would have been preferable in 2008 and it would have flushed out a lot of problems and inefficiencies and provided a more solid base for growth going forward ... but it didn't happen. (Keating was right: recessions ... sometimes you have to have them.) Instead, interest rates will keep falling, the government will keep borrowing and stimulating, the immigrants will keep coming to Melbourne and Sydney, the new hubs Victoria and NSW badly need will probably not be built, Australians will keep voting for the major parties to maintain the status quo and house prices will keep rising until the tipping point is reached. I'll say that game can be played until 2025. So, it's October 2015 for Frummy, January 2016 for you and 2025 for me.
Doc, its amazing how you can only see what you want to see, and dismiss everything that is important , like the economy and jobs( the economy).

You clowns keep calling migration( the demise of the western world) as your saviour, firstly immigration only works in an economy that is growing along with jobs. But in a falling economy with falling jobs,immigration is nothing more than a hindrance and burden on the economy and population and taxes, as we need to house and clothe and feed these people, many who come here for the lifetime meal ticket for themselves and heavily extended and extending families.

Secondly, immigration has been rampant in the US for decades,bringing the population to well over 300 million as opossed to our 20 or so million. Yet it did not stop prices from collapsing their, and their ponzi was never pumped to levels ours was or has been thanks to negative gearing which they didnt have.

Don't think it really matters how much stimulus goes in anymore, what many of you fail to understand is that firstly stimulus is merely an artificial growth measure as no real growth measure is able to work or move these prices and debt levels any further. The morons won't let it correct because they know the end result and complete devastation it will lead to.
The pay packets of the average worker can no longer support or sustain these levels of prices and debt anymore.

What about jobs, we don't need those doc, not one mention from you of jobs or employment, they don't matter or you know there is no hope.

The most important thing of all you need to understand is China. Ten or so years ago , they made next to nothing in comparison to today.

THEY NOW MAKE EVERYTHING, AND I MEAN ***EVERYTHING****
EVERYTHING THAT THE US, EURO,UK AND AUSTRALIA ***USED*** TO MAKE.....

This is the very reason all our jobs,businesses and Industries are collapsing doc, our wages cannot compete anymore,NOT EVEN CLOSE BY ANY SCALE OR MEASURE. The reason ford and holden are now closing, is because we cannot compete, the government can try and prop it up for so long, but when you CANNOT COMPETE ON ANY MEASURE,its simply a matter of time before collapse, just as we have seen. We cannot even compete with The US euro or UK, as our wages are double theirs, thats why we have lost a motor industry and all of them have not and also why both our adult and youth unemoyment now exceeds theirs. You can push shit uphill with a stick for only so long, but when the rains start coming down too , and it all turns to diahrea, you may as well just give up as they did with the motor industry. There are many Industries and businesses being propped up here, just as the motor industry is and was, just like they are in all western economies pretending they fight Chinese wages.

Your all stupid, talk about that and tell me how we could ever have a chance.
Look at the bigger picture :bye:

You used to sound half intelligent doc, bit since you bought a house( well maybe 5% of it), you sound dismissive of much reality.

Your were right that we should of had a recession / correction in 2008, instead of go on the biggest ponzi pumping debt spree never zeen before, but at the time we were positioned well with the mining boom compared to others. I think that they should of kept interest rates higher, left them at five or so instead 2.5%. Prices would now be lower, and we would have more room to move on rates now when we will really be needing it. They fired that weapon way to early, and screwed things further. Very bad timing . An effective weapon abused.
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John Frum
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peter fraser
14 Oct 2014, 09:47 AM
Short covering, nothing more. Watch it start to tumble again soon.
"It were not best that we should all think alike; it is difference of opinion that makes horse races." - Mark Twain on why he avoids discussing house prices over at MacroBusiness.
"Buy land, they're not making any more of it." - Georgist Land Tax proponent Mark Twain laughing in his grave at humourless idiots like skamy that continually use this quip to justify housing bubbles.
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newjez
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John Frum
14 Oct 2014, 10:48 AM
Short covering, nothing more. Watch it start to tumble again soon.
On the dollar maybe.
Whenever you have an argument with someone, there comes a moment where you must ask yourself, whatever your political persuasion, 'am I the Nazi?'
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Dr Watson
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14 Oct 2014, 09:48 AM
Doc, its amazing how you can only see what you want to see
The same could be said for you mate.
Quote:
 
immigration has been rampant in the US for decades,bringing the population to well over 300 million as opossed to our 20 or so million. Yet it did not stop prices from collapsing their, and their ponzi was never pumped to levels ours was or has been thanks to negative gearing which they didnt have.
There's no comparison with America. They're not trying to herd the bulk of their population into just two cities (like we do with Sydney and Melbourne) are they? Leave aside New York and Los Angeles, and perhaps Chicago and Houston, which are BIG, there are at least 30 other cities in the US with a population over 500,000 people. You want to cram everyone in Melbourne and Sydney? I tell you what mate, you'll get distortions in your housing markets. Too many people and not enough dwellings. It's all about the spread of the population — something we're failing miserably at and something the USA has succeeded at:

Posted Image

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Don't think it really matters how much stimulus goes in anymore, what many of you fail to understand is that firstly stimulus is merely an artificial growth measure as no real growth measure is able to work or move these prices and debt levels any further.
I've always accepted that borrowing to stimulate the economy is stealing demand from the future, and that such a strategy can't be used forever. I'm proposing that it might be workable for another 10 years, given our low public debt-to-GDP. Pretty reasonable, no?
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The morons won't let it correct because they know the end result and complete devastation it will lead to.
Like I said, a recession in 2008 would have been a healthy, cleansing experience for the economy.
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The pay packets of the average worker can no longer support or sustain these levels of prices and debt anymore.
Then why aren't we seeing a spike in foreclosure rates?
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You can push shit uphill with a stick for only so long, but when the rains start coming down too , and it all turns to diahrea
Are you feeling OK Ted?
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You used to sound half intelligent doc, bit since you bought a house( well maybe 5% of it), you sound dismissive of much reality.
Come now, Ted. I still maintain Australia is on an unsustainable course. My foray into home ownership hasn't changed that. But my timing has changed. I see the endgame being pushed much farther in the future. The creativity of policymakers is not to be underestimated. They keep plucking rabbits out of hats. How long are you going to put your life on hold for, Ted? How long will you deny your wife her needs?
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Attachments: USPopDistribution.jpg (34.17 KB)
Edited by Dr Watson, 14 Oct 2014, 12:54 PM.
The trouble with the world is that the stupid are cocksure and the intelligent are full of doubt — Bertrand Russell
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Mike
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John Frum
14 Oct 2014, 10:48 AM
Short covering, nothing more. Watch it start to tumble again soon.
I don't think so, Chinese data came in a lot stronger then expected Iron Ore should rally back above $90 a ton in the coming weeks and head back towards $100 prior to the end of the year.

The dollar I expect will fall more over the medium and longer term.
http://mike-globaleconomy.blogspot.com.au/
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newjez
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Mike
14 Oct 2014, 01:29 PM
I don't think so, Chinese data came in a lot stronger then expected Iron Ore should rally back above $90 a ton in the coming weeks and head back towards $100 prior to the end of the year.

The dollar I expect will fall more over the medium and longer term.
I would be very surprised if it travelled far from 80 for long in either direction. I don't think there is any hope of a recovery in the short term, and I expect the price only to be supported by closing mines. But hey, maybe if feels better to be optimistic.

Ask yourself, why would the dollar go down, yet iron ore goes up? Makes no sense.
Edited by newjez, 14 Oct 2014, 03:36 PM.
Whenever you have an argument with someone, there comes a moment where you must ask yourself, whatever your political persuasion, 'am I the Nazi?'
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Ned Flanders
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Dr Watson
14 Oct 2014, 08:49 AM
Really? I don't think we're even remotely close. Public debt-to-GDP can continue rising for years to come.

No, this was the case until early 2014. Muddle along, slicing rates here, stimulating there. But there are exogenous factors at play that will accelerate the stimulus cycle. We will get to ZIRP and max the gov credit card very quickly now.
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(Not a good thing, by the way, but it's the path our policymakers are stuck with and we need to base our investment decisions around it.)

When you base your policy on the current terms of trade, assuming it will last forever, you lose control over the effect of that policy when the terms of trade move against you.
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When we do reach that tipping point, that moment of "we're maxed out", we'll have some challenges, but it might be another decade away or even longer.

I don't think we are a decade away from that. I am closer to Frummy's estimate.
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Actually, I think a recession would have been preferable in 2008 and it would have flushed out a lot of problems and inefficiencies and provided a more solid base for growth going forward ... but it didn't happen. (Keating was right: recessions ... sometimes you have to have them.)

If the Chinese hadn't stimulated also, we would have had that recession. Now things are much worse, and the Chinese are trying to contain an out of control asset bubble.
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Instead, interest rates will keep falling; the government will keep borrowing and stimulating; the immigrants will keep coming to Melbourne and Sydney; the new hubs Victoria and NSW badly need will probably not be built — that's bullish for house prices, by the way; Australians will keep voting for the major parties to maintain the status quo and house prices will keep rising until the growth model is exhausted. I'll say that game can be played until 2025.

Well, I happen to disagree, but you could be right. A series of exogenous shocks will bring the whole thing down faster than the government/RBA can stimulate.
------------------------------
" ... which is that all-too-familiar dynamic in Irish life where people tell lies, cover them up and create all sorts of collateral damage, sometimes spread out over decades, and never take responsibility."
- Alan Glynn
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b_b
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Ned Flanders
14 Oct 2014, 06:25 PM
No, this was the case until early 2014. Muddle along, slicing rates here, stimulating there. But there are exogenous factors at play that will accelerate the stimulus cycle. We will get to ZIRP and max the gov credit card very quickly now.


When you base your policy on the current terms of trade, assuming it will last forever, you lose control over the effect of that policy when the terms of trade move against you.


I don't think we are a decade away from that. I am closer to Frummy's estimate.


If the Chinese hadn't stimulated also, we would have had that recession. Now things are much worse, and the Chinese are trying to contain an out of control asset bubble.


Well, I happen to disagree, but you could be right. A series of exogenous shocks will bring the whole thing down faster than the government/RBA can stimulate.
There is no max on govt credit. The australian govt can not / will not nr out of aud.
Ned Flanders
14 Oct 2014, 06:25 PM
No, this was the case until early 2014. Muddle along, slicing rates here, stimulating there. But there are exogenous factors at play that will accelerate the stimulus cycle. We will get to ZIRP and max the gov credit card very quickly now.


When you base your policy on the current terms of trade, assuming it will last forever, you lose control over the effect of that policy when the terms of trade move against you.


I don't think we are a decade away from that. I am closer to Frummy's estimate.


If the Chinese hadn't stimulated also, we would have had that recession. Now things are much worse, and the Chinese are trying to contain an out of control asset bubble.


Well, I happen to disagree, but you could be right. A series of exogenous shocks will bring the whole thing down faster than the government/RBA can stimulate.
There is no max on govt credit. The australian govt can not / will not nr out of aud.
Edited by b_b, 14 Oct 2014, 06:50 PM.
(S – I) + (T - G) + (M - X) = 0
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Veritas
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b_b
14 Oct 2014, 06:47 PM
There is no max on govt credit. The australian govt can not / will not nr out of aud.

There is no max on govt credit. The australian govt can not / will not nr out of aud.
Here we go.

B_B answer me one simple question: If the Australian Government cannot run out of money, what is the point in having fiscal targets at all?

By your logic, Governments can just print money anytime its budgeted expenditure exceeds its forecast revenue.

National debt? Who cares? The bond market? Fuck em, we will pay with newly minted dollars.

Crazy talk.

I have posted this Krugman critique of the MMT position before (quite recently actually) and neither you nor Peter Fraser bothered to even try and refute the points made. Care to have a go now?

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In a way, I really should not spend time debating the Modern Monetary Theory guys. They’re on my side in current policy debates, and it’s unlikely that they’ll ever have the kind of real — and really bad — influence that the Austrians have lately acquired. But I really don’t feel like getting right back to textbook revision, so here’s another shot.

First of all, yes, I have read various MMT manifestos — this one is fairly clear as they go. I do dislike the style — the claims that fundamental principles of logic lead to a worldview that only fools would fail to understand has a sort of eerie resemblance to John Galt’s speech in Atlas Shrugged — but that shouldn’t matter.

But I do get the premise that modern governments able to issue fiat money can’t go bankrupt, never mind whether investors are willing to buy their bonds. And it sounds right if you look at it from a certain angle. But it isn’t.

Let’s have a more or less concrete example. Suppose that at some future date — a date at which private demand for funds has revived, so that there are lending opportunities — the US government has committed itself to spending equal to 27 percent of GDP, while the tax laws only lead to 17 percent of GDP in revenues. And consider what happens in that case under two scenarios. In the first, investors believe that the government will eventually raise revenue and/or cut spending, and are willing to lend enough to cover the deficit. In the second, for whatever reason, investors refuse to buy US bonds.

The second case poses no problem, say the MMTers, or at least no worse problem than the first: the US government can simply issue money, crediting it to banks, to pay its bills.

But what happens next?

We’re assuming that there are lending opportunities out there, so the banks won’t leave their newly acquired reserves sitting idle; they’ll convert them into currency, which they lend to individuals. So the government indeed ends up financing itself by printing money, getting the private sector to accept pieces of green paper in return for goods and services. And I think the MMTers agree that this would lead to inflation; I’m not clear on whether they realize that a deficit financed by money issue is more inflationary than a deficit financed by bond issue.

For it is. And in my hypothetical example, it would be quite likely that the money-financed deficit would lead to hyperinflation.

The point is that there are limits to the amount of real resources that you can extract through seigniorage. When people expect inflation, they become reluctant to hold cash, which drive prices up and means that the government has to print more money to extract a given amount of real resources, which means higher inflation, etc.. Do the math, and it becomes clear that any attempt to extract too much from seigniorage — more than a few percent of GDP, probably — leads to an infinite upward spiral in inflation. In effect, the currency is destroyed. This would not happen, even with the same deficit, if the government can still sell bonds.

The point is that under normal, non-liquidity-trap conditions, the direct effects of the deficit on aggregate demand are by no means the whole story; it matters whether the government can issue bonds or has to rely on the printing press. And while it may literally be true that a government with its own currency can’t go bankrupt, it can destroy that currency if it loses fiscal credibility.

Now, I am not predicting hyperinflation for the US — I am not Peter Schiff! Most of our current deficit is cyclical, and even in the long run a modest return of political rationality would make the budget issue eminently solvable. But the MMT people are just wrong in believing that the only question you need to ask about the budget deficit is whether it supplies the right amount of aggregate demand; financeability matters too, even with fiat money.

OK, I have no illusions that this will convince anyone in this area. (Can you imagine John Galt admitting that he was wrong?) But I thought I should put it down.
Edited by Veritas, 14 Oct 2014, 07:36 PM.
Property acquisition as a topic was almost a national obsession. You couldn't even call it speculation as the buyers all presumed the price of property could only go up. That’s why we use the word obsession. Ordinary people were buying properties for their young children who had not even left school assuming they would not be able to afford property of their own when they left college- Klaus Regling on Ireland. Sound familiar?

The evidence of nearly 40 cycles in house prices for 17 OECD economies since 1970 shows that real house prices typically give up about 70 per cent of their rise in the subsequent fall, and that these falls occur slowly.
Morgan Kelly:On the Likely Extent of Falls in Irish House Prices, 2007
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Lou Ellen
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The RBA and APRA are going to launch macroprudential tightening, probably by year end, probably targeting investors.

The offshore bid isn’t going to stop but it is facing a squeeze with Chinese and local authorities moving and the falling dollar hammering returns.

The last time Sydney went nuts like this and authorities sat on it, prices in the outer mortgage belt crashed and the under water mortgagees stalled the move up ladder (of entry level buyers riding the boom then moving up to more expensive properties closer in).

But in 2003, that bust was supported by a mining boom that took off simultaneously and supported income growth and employment.

This time, income growth across the nation has stalled as the terms of trade crash and mining jobs are about to crash as well as projects are completed.

It’s really that simple. Interest rates are going to fall when the boom goes bust and the dollar will come down much further but that’s not going to be enough support.
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