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Australian households now have $2.15 Trillion in Super; Households have debts of $1.84T
Topic Started: 24 Nov 2016, 04:48 PM (3,167 Views)
Matthew
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Rastus2
24 Nov 2016, 07:40 PM

as a general rule, the term "financial shock" is not used to describe positive events..
Only for those who view "shock" to be a negative term.

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a sudden upsetting or surprising event or experience
My only hope for my three boys is that they turn out nothing at all like Chris.
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Sydneyite
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Jon Snow
25 Nov 2016, 12:29 AM
No, the majority of loan assets are mortgages, held by households.
I have more to say re the rest of your response, but this part is false. Loans are an ASSET of the bank (unless securitised - then some other institutions), and a LIABILITY of the household. So when looking at aggregate household balance sheets, the assets noted would generally not be made up of household mortgages.

So it is true that the majority of banks assets are made up of household mortgages, but it is not true that this is reflected in the assets column of the household aggregate balance sheet!

The only argument you could make is that the loans might be indirectly also held as household assets through ownership of bank shares through super funds etc. But this is an indirect relationship, and is also diluted via institutional and o/s ownership of banks and securitised loans etc as well. And therefore not even close to 1:1.
Edited by Sydneyite, 25 Nov 2016, 10:55 AM.
For Aussie property bears, "denial", is not just a long river in North Africa.....
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Jon Snow
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Rufus
25 Nov 2016, 12:46 AM
Only if you are referring to money.

In the modern world, that's generally how things are bought and sold.
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Essentially balance sheets are crystallised at a moment in time and the future sale price of an assets isn't what is used in that balance sheet. The market value today is/should be used wherever possible.
To crystallise means to convert to money. The market value of an asset IS it's future value.
Sydneyite
25 Nov 2016, 09:22 AM
I have more to say re the rest of your response, but this part is false. Loans are an ASSET of the bank (unless securitised - then some other institutions), and a LIABILITY of the household. So when looking at aggregate household balance sheets, the assets noted would generally not be made up of household mortgages.

So it is true that the majority of banks assets are made up of household mortgages, but it is not true that this is reflected in the assets column of the household aggregate balance sheet!

The only argument you could make is that the loans might be indirectly also held as household assets through ownership of bank shares through super funds etc. But this is an indirect relationship, and is also diluted via institutional and o/a ownership of banks and securitised loans etc as well. And therefore not even close to 1:1.
Sorry, I mean't that the majority of the bank's loan assets are mortgages, held by households.

The majority of household assets are houses, marked to market. Marked to book value net household assets would be negative.
Edited by Jon Snow, 25 Nov 2016, 10:41 AM.
Speak when you are angry and you will make the best speech you will ever regret.
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Sydneyite
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Jon Snow
25 Nov 2016, 10:39 AM
The majority of household assets are houses, marked to market. Marked to book value net household assets would be negative.
I'll post the image of the chart I referred to earlier:

Posted Image

So while it is true housing is the majority of assets, households still hold SIGNIFICANT assets over and above housing - 40% of household assets are financial / non-housing assets.

There is no way household net assets would be negative if "marked to book value" (whatever the hell this means! :wak: ).You can see that even if housing values were set at zero, net wealth / assets would still be double liabilities. And this is a ridiculous scenario / assertion anyway.

Remember, the thread topic here is "households have $2.15T in super" - that on it's own is more than aggregate household debt!
Ex BP Golly
25 Nov 2016, 01:17 AM
How about you make up another irrelevant scenario to convince us that what is before our eyes.... isn't before our eyes.
Huh?? The only irrelevance here is your contribution to the thread..... my points are completely relevant - sorry if this topic is beyond your abilities to comprehend. :re:
Edited by Sydneyite, 25 Nov 2016, 01:01 PM.
For Aussie property bears, "denial", is not just a long river in North Africa.....
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Strindberg
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Simon_S
24 Nov 2016, 04:57 PM
Interesting note in the Household Debts link.

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Rising household debt has been only partly matched by the increase in the value of household assets. Over the past 25 years, household debt has increased nearly twice as fast as the value of household assets.



But you told us that for every debt there is a corresponding Asset........Doesn't look like that Corresponding Asset is of the same value........


Your deceptively worded quote (arguably false) has had its desired intention of fooling the dumb gullible idiots into making the absolutely and entirely crap false understanding you have drawn in that last sentence of yours .

RBA table E1 http://www.rba.gov.au/statistics/tables/xls/e01hist.xls

Column J - Household total assets

June 1991 - $1,530 billion
June 2016 - $10,515 billion

A rise in household assets of almost 9 TRILLION DOLLARS

Column K - Household total liabilities

June 1991 - $218 billion
June 2016 - $2,021 billion

A rise in household liabilities of less than 2 TRILLION DOLLARS

The rise in household assets has exceeded the rise in household liabilities by a factor of more than FOUR over the last 25 years.

Put another way, for every dollar increase in debt there has been an increase of more than four dollars in assets over the last 25 years. Did you miss out?

Quote:
 
.Doesn't look like that Corresponding Asset is of the same value........
True. The corresponding additional asset is more than four times the additional debt over the last 25 years.
Edited by Strindberg, 25 Nov 2016, 12:33 PM.
Housing costs to Income broadly unchanged since 1994 - re-ratified here
The People of Australia have the highest median wealth in the World
2002-2012 10 year house price growth the SLOWEST since 1952-1962
"There are two kinds of people in this world: ones that fiddle around wondering whether a thing's right or wrong and guys like us." (Hugo to Gagin in Ride the Pink Horse)
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Simon_S
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Strindberg
25 Nov 2016, 12:28 PM


True. The corresponding additional asset is more than four times the additional debt over the last 25 years.
Yes Its deceptive.......But then its True?

So let me get this straight.

Debt is at Record Highs......
Asset values are at Record high......
Interest Rates are at Record lows......

And now Rates are about to Rise......

Will the "Corresponding Asset Remain Four times" the additional Debt over the Next 25 years......


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Trollie
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Simon_S
25 Nov 2016, 02:19 PM
Yes Its deceptive.......But then its True?

So let me get this straight.

Debt is at Record Highs......
Asset values are at Record high......
Interest Rates are at Record lows......

And now Rates are about to Rise......

Will the "Corresponding Asset Remain Four times" the additional Debt over the Next 25 years......

Great reaction Timo

You stay on message, it worked wonders last time you predicted a crash :tu:
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Simon_S
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Trollie
25 Nov 2016, 02:26 PM
Great reaction Timo

You stay on message, it worked wonders last time you predicted a crash :tu:
LOL....Still pretending I'm Timmo......

Is that where that 5 years earlier reply is based on?



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Trollie
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Simon_S
25 Nov 2016, 02:48 PM
LOL....Still pretending I'm Timmo......

Is that where that 5 years earlier reply is based on?


You even make the same mistakes as timo
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Foxy
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Zero is coming...

I asked Foxbat about this, he said the following.

You borrow from yourself to force up the asset value so you have more assets, you then borrow more from yourself on the basis that the underlying assets are worth more, so you can borrow more to force up the value of the assets so you can borrow more.

I asked him for a visualization of this process.

He said it is like being able to suck your own cock, then you go down to the pub and brag to your mates what great sex you just had.

It works for a time, until one of your mates gets suspicious after noticing how pink and puffy your lips are and a white foam on your chin, he then places a hidden camera and live streams the whole act to the internet.

This is like buying rentals in mining towns like Port Hedland, Karratha and Perth, it works for a time, but now in the cold hard light of day it is plain to see (the foam on the property bulls lips), it was all just Tomfoolery.

Peter






Edited by Foxy, 25 Nov 2016, 03:04 PM.
http://www.afr.com/content/dam/images/g/n/2/1/u/8/image.imgtype.afrArticleInline.620x0.png/1456285515560.png
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