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Foreign interest in Aussie debt peaks; The great capital flight begins
Topic Started: 25 Sep 2015, 10:25 AM (7,404 Views)
zaph
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Strindberg
26 Sep 2015, 09:56 AM
They were not deterred then by loony internet calls that they had no fire power.
The RBA never has any fire power, whether IRs are 1% or 100%.
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Rastus2
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Strindberg
26 Sep 2015, 09:56 AM
The RBA actually began an interest rate cut series on 7 February 2001 when the Australian dollar was US 55cents, far below its current level and followed it with five more cuts. They were not deterred then by loony internet calls that they had no fire power.

Loki's allusion to foreign selling of gov bonds is not supported by John's opening article which specifically states that foreigners are not selling, and anyway surplus AUD (with effect on ex rates) could only arise from such a process if the sellers could sell back to the RBA/Treasury - which they cannot do. Foreigners selling their bonds on the secondary market makes no difference to the supply and demand for AUD regardless of residency of the participants.
I would have thought the sedondary market would have some impact to the demand of the AUD if confidence was lost by overseas holders...
Shadow - Defrauded his Bank ? 2015 I have 9 different loans and my bank had no idea which ones were personal and which were investment. They had half of them classed incorrectly. When this change came in they asked me to tell them if any personal loans were incorrectly classed as investment, which I did, and they switched them to personal for the lower rate. They also had a couple of investment loans incorrectly classed as personal. They didn't ask me about those. So they stay on the lower rate too. Worked out pretty well. :)
Shadow - 2008 Sydney Median House Price 1.25M by 2014-2015

Shadow : I think this boom has already begun in several cities. My prediction :
Peak of boom: 2014-2015. Sydney Median Price: $1,250,000 Bottom of bust: 2017-2018. Sydney Median Price: $1,100,000

Shadow's Original 2010 House Boom and Crash prediction http://s836.photobucket.com/user/rastus22/media/shady-orig-2010-chart.png.html?sort=3&o=0

Shadow's attempt to edit his 2010 chart in 2015 and replace it with one that does not show a crash in 2013 http://s836.photobucket.com/user/rastus22/media/Screen%20Shot%202015-06-06%20at%207.12.52%20pm_1.png.html
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Might be time for all those UK expats to cash out of Aussie realestate before prices and the dollar fall to far and move back into the pound. Some probably now wishing they had done it a few months ago.

Big numbers at auction today, a new record for building completions coming onto the market next month.

Im a bit dissapointed by the banks, and was hoping this building boom and prices would go for a while yet, instead they have literally cut investors off at the knees by increasing required deposit to 20%, and as if that was not enough, they have also increased interest rates for them. I never saw either of these coming, but then again I never saw the leverage of superfunds coming either.

The mantra for the last number of decades has been to increase debt levels and therefore prices by increasing lvrs. Yet ALL of a sudden we have a complete reversal.

With interest rates cuts now being about the only weapon of choice left as they have NO other answers left, wont be long before a cut. 0.5% in one go as desperation hits overdrive. Who knows, might get a cut as soon as next week. GST rise wont be far behind.




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John Frum
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herbie
25 Sep 2015, 08:39 PM
And went, Well if the BoC can do it then why couldn't the RBA???


Like you said Herbie, Canada is already screwed - it's pretty much us in a few months time - so they're pushing on a string dropping rates now.

Also as Loki stated if any Dutch Diseased economy is going to experience a post-China low-IR-driven goods and services revival it will more likely be one that sits next door to the largest economy on earth, not an oversized island stymied by the tyranny of distance.

Quote:
 
And as I also said to Chris a while back, in my bit of the nation (Brisvegas) in the last recession, house prices actually went up - And by quite a bit.


That's because the over-investment of the late 80's was mostly centered around the Japanese speculating in Brissy's commercial property and Gold Coast holiday apartments, which most punters had little or no financial exposure to - their experience of the recession was losing their job as the aforementioned speculative businesses closed.

This time it's the Chinese buying resi prop in Sydney and Melbourne. A resi prop bubble formation and busting directly impacts the financial fortunes of those who rent or own properties in the affected areas
Strindberg
26 Sep 2015, 09:56 AM
The RBA actually began an interest rate cut series on 7 February 2001 when the Australian dollar was US 55cents, far below its current level and followed it with five more cuts.
Yep, which works with my point that the RBA pretty much moves in lockstep with the much more important Fed.

The only reason the RBA could buck the trend in the recent past was because we had a once in a century resources boom "blowing sunshine up or arse".
As that fades we gradually recalibrate monetary policy in line with the Fed.

Edited by John Frum, 26 Sep 2015, 11:43 AM.
"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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The Whole Truth
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peter fraser
25 Sep 2015, 11:30 PM


A falling AUD does push up the cost of imported goods but it creates jobs here.
Keynesian bullshit straight out of a University text on economics. Job creation, where? Our economy is a consumer led economy peter. Retail employs 1 in 10 workers in Australia, more than any other private sector industry. 1.2 Million jobs, mostly selling imported products, products people buy less of now the dollar has fallen and our economy has grown weaker. And please don't quote any bullshit govenment stats on employment figures. When you regard working an hour a week as being employed you have your cock firmly in your hand and semen all over your keyboard.

http://www.anra.com.au/retailisjobs/media/uploads/Retailjobs.pdf

You need to get your head out of mainstreem economics and into the real world Peter.
"Panics do not destroy capital; they merely reveal the extent to which it has been previously destroyed by its betrayal into hopelessly unproductive works." John Stuart Mill
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Andrew Judd
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Strindberg
26 Sep 2015, 09:56 AM
surplus AUD (with effect on ex rates) could only arise from such a process if the sellers could sell back to the RBA/Treasury - which they cannot do. Foreigners selling their bonds on the secondary market makes no difference to the supply and demand for AUD regardless of residency of the participants.
Interesting. I had been thinking it would create surplus dollars and could cause a sudden rise in spending and economic activity if for example China sells a few hundred billion US treasuries.
The Whole Truth
26 Sep 2015, 12:23 PM
Keynesian bullshit straight out of a University text on economics. Job creation, where? Our economy is a consumer led economy
I think it is far truer to say the Australian economy is led by the consumers of the world rather than only those of Australia.
Edited by Andrew Judd, 26 Sep 2015, 12:36 PM.
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Rastus2
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Andrew Judd
26 Sep 2015, 12:31 PM
Interesting. I had been thinking it would create surplus dollars and could cause a sudden rise in spending and economic activity if for example China sells a few hundred billion US treasuries.

I think it is far truer to say the Australian economy is led by the consumers of the world rather than only those of Australia.

I will be waiting for strindberg to explain his way out of that clumsy claim....
Edited by Rastus2, 26 Sep 2015, 01:12 PM.
Shadow - Defrauded his Bank ? 2015 I have 9 different loans and my bank had no idea which ones were personal and which were investment. They had half of them classed incorrectly. When this change came in they asked me to tell them if any personal loans were incorrectly classed as investment, which I did, and they switched them to personal for the lower rate. They also had a couple of investment loans incorrectly classed as personal. They didn't ask me about those. So they stay on the lower rate too. Worked out pretty well. :)
Shadow - 2008 Sydney Median House Price 1.25M by 2014-2015

Shadow : I think this boom has already begun in several cities. My prediction :
Peak of boom: 2014-2015. Sydney Median Price: $1,250,000 Bottom of bust: 2017-2018. Sydney Median Price: $1,100,000

Shadow's Original 2010 House Boom and Crash prediction http://s836.photobucket.com/user/rastus22/media/shady-orig-2010-chart.png.html?sort=3&o=0

Shadow's attempt to edit his 2010 chart in 2015 and replace it with one that does not show a crash in 2013 http://s836.photobucket.com/user/rastus22/media/Screen%20Shot%202015-06-06%20at%207.12.52%20pm_1.png.html
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John Frum
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Strindberg
26 Sep 2015, 09:56 AM
Loki's allusion to foreign selling of gov bonds is not supported by John's opening article which specifically states that foreigners are not selling, .
So what? Budget projections at the moment indicate a lot more money needs to be borrowed in the near future to keep on paying government contractors and staff.

A loss of foreign appetite for australian government debt will require yields to go higher on new issues no matter what jiggery pokery the RBA attempts, sending prices on the secondary market crashing and encouraging further selling.

Quote:
 
and anyway surplus AUD (with effect on ex rates) could only arise from such a process if the sellers could sell back to the RBA/Treasury - which they cannot do. Foreigners selling their bonds on the secondary market makes no difference to the supply and demand for AUD regardless of residency of the participants


Poppycock - you haven't a clue what you're talking about.

Foreigners selling AUD bonds on the secondary market will be doing so because they intend to take their capital to a country where they get more bang for their buck.
Edited by John Frum, 26 Sep 2015, 01:26 PM.
"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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Mike
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John Frum
26 Sep 2015, 11:19 AM




Quote:
 
Like you said Herbie, Canada is already screwed - it's pretty much us in a few months time - so they're pushing on a string dropping rates now.


Canada is experiencing a recession due to its mining bust (just like Australia) but also the collapse in oil prices which is a major export of Canada. Australia does not have that same problem with oil prices, in fact when oil prices fall Australia benefits with lower energy prices to consumers and industry. This is why Australia is not following Canada's path.


Quote:
 
Also as Loki stated if any Dutch Diseased economy is going to experience a post-China low-IR-driven goods and services revival it will more likely be one that sits next door to the largest economy on earth, not an oversized island stymied by the tyranny of distance.


Canada exports about 3 million barrels of oil per day (actually a little more) in US dollars at present prices this $171,000,000 in exports per day from oil. Converted into Canadian dollars this is $228,000,000 at current exchange rates. This is about $83 billion per year.

Australia over 2014 exported $64 billion worth of Iron ore and concentrates, Canada has suffered a large mining bust just like we have plus a large collapse in Oil prices on top of this. 1 and half years ago Canadian oil would have brought in $150+ billion.

Canada has the double whammy, collapsing mining industry and collapsing oil industry.

http://mike-globaleconomy.blogspot.com.au/
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Andrew Judd
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Rastus2
26 Sep 2015, 01:11 PM

I will be waiting for strindberg to explain his way out of that clumsy claim....
Stringberg is correct. Selling treasuries to another public sector buyer cannot have a big impact on the number of dollars in circulation.
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