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Why Australia can't avoid a recession; (& Canada, Korea, China and others)
Topic Started: 12 Dec 2016, 11:25 PM (8,493 Views)
Simon_S
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Trollie
15 Dec 2016, 10:43 AM
Timo is confused because the situation is more complex than how he is going to spend his tuckshop money.
What could more complex than the US FED Raising Rates When.....

House prices are at Record Highs....
Debt is at Record levels....

Timo must have really had an effect on you Trollie.

I think Rising Interest Rates might have more impact though.


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Rufus
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Simon_S
15 Dec 2016, 11:20 AM
What could more complex than the US FED Raising Rates When.....

House prices are at Record Highs....
Debt is at Record levels....

Timo must have really had an effect on you Trollie.

I think Rising Interest Rates might have more impact though.

Do you know what the word "mandate" means, and do you know what the RBA's Mandate is?

Take risks - if you win you will become wealthy, if you lose you will become wise
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Simon_S
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Rufus
15 Dec 2016, 11:27 AM
Do you know what the word "mandate" means
Sorry not into Guys but that's OK if you are.....

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skamy
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Simon_S
15 Dec 2016, 07:34 AM
Are they like all the other Doomster Cults like the IMF World Bank OECD RBA US FED and god knows anyone else that doesn't preach booms and rising house prices to the Moon.


Maybe you should read the Report....

Or maybe just read what I posted but here it is again:



Simon it is wrong, they have mixed up two savings rate. The 9-11% figure is DISPOSABLE INCOME. The 300+ % of income total savings includes super.

You can check it out for yourself in 5 minutes if you wish.

Credit Suisse get a lot of things wrong when they report about Australia.
Definition of a doom and gloomer from 1993
The last camp is made up of the doom-and-gloomers. Their slogan is "it's the end of the world as we know it". Right now they are convinced that debt is the evil responsible for all our economic woes and must be eliminated at all cost. Many doom-and-gloomers believe that unprecedented debt levels mean that we are on the precipice of a worse crisis than the Great Depression. The doom-and-gloomers hang on the latest series of negative economic data.
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Jon Snow
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Sydneyite
14 Dec 2016, 11:40 PM
You are mis-understanding - It's not the deposits that are used as collateral for cash market loans, it's the banks capital reserves.

No, I think you are wrong there. The bank borrows against ALL of it's assets.
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Wrong - Bank A still has to fund the settlement of all those cheque amounts with bank B using real (ESA) money.

No, not if the cheque becomes a deposit for bank B at bank A. Only if bank B demands a cash settlement. In practice bank A borrows money from bank B, with which it settles the claim on the cheque. Now bank B has an asset in bank A. Deposit/loan is just semantics.

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If the net ESA outflows from Bank A are greater than bank As ability to fund them on that day (including having enough capital / collateral to borrow any short-fall from the overnight cash market), then they will not be able to meet their net ESA settlement requirements for that day - and they would be insolvent and have to be rescued somehow.
Which they would be, by the central bank, with an emergency line of credit. If there is a run on bank A, all of the withdrawn deposits are put back into the banking system, from which they can be re-lent to bank A by the other banks. In there is a solvency problem at bank A, that is a completely different problem. If bank A's assets are not impaired, it can always borrow against them. It may have to take a hit on margins, but good quality assets can always be collateralised or securitised.

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a deposit run on a bank is absolutely a big, big problem.
There was a long discussion on this some time ago. b_b totally demolished this claim. Let me see if I can find it.
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I don't believe loans can be used as collateral in overnight cash market repo agreements - usually the collateral has to be government bonds and their like.
I don't think that is true. But even if it was, collateral haircuts, MTAs and ratios can be changed at the discretion of the lender.
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Remember the banks capital ratio requirements are based on the size of their loan book - there's a reason for that!
The reason is that the capital requirements are a ratio of current assets.
skamy
15 Dec 2016, 12:53 AM
Slow wages growth is a problem, but that won't last for long as the economy continues to recover from the GFC.
:wak: It's got nothing to do with the GFC you turnip! Real wages have been slowing/going negative all over the Western world for DECADES, hence the rise in private debt. The credit impetus has replaced wage growth in final demand.
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Already construction wages are heading upwards and as retail etc. recovers and staff shortages emerge wages will improve again.
Yes, a centrally planned communist economy can set wages to any level they like, but they can't push up purchasing power (i.e. real wages).
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I know all about the banks and their agendas during boom times and bust. You are the one who does not understand. We have been telling you for years that the GFC created an asset buying opportunity and you just ignored everyone. Once banks ease lending and we get back to 95% mortgages (and it will happen) credit growth will explode. This will be the third time in my life I have watched this play out. It will play out the same way because it always plays out to benefit the super rich ALWAYS. You are a fool to believe otherwise.
Is that where you see yourself? As part of the super-rich stealing from the poor and future generations? Interesting self-image.
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The MSM agenda during a bust is to create negativity and destroy confidence, this allows rich people to multiply their portfolio of assets and this is exactly what happened. Why did you support this agenda right through the GFC?
You are the one who supported this madness by buying into it. You and all the other greedy useless eaters. Thought you would all be millionaires and rockstars because you discovered some secret squirrel magical method to effortless riches. It's hard to determine whether it's laughable or despicable.
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Maybe next time around you will join me trying to persuade young people not to listen to this crap and get on with buying their homes in a timely fashion.
Seig Heil! Got any other orders from up on high you would like to pass down to young people?
Edited by Jon Snow, 15 Dec 2016, 08:31 PM.
Speak when you are angry and you will make the best speech you will ever regret.
Ambrose Bierce
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Rufus
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Jon Snow
15 Dec 2016, 07:43 PM
No, I think you are wrong there. The bank borrows against ALL of it's assets.


the banks assets is the shareholders equity, but that has to be held as Tier 1, 2, and 3 assets which are a function of it's loan book, or more correctly the loan book is a function of the shareholder equity.

Take risks - if you win you will become wealthy, if you lose you will become wise
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Trollie
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Simon_S
15 Dec 2016, 11:36 AM
Sorry not into Guys but that's OK if you are.....
No one is shocked you don't know what it means.
Simon_S
15 Dec 2016, 11:20 AM
What could more complex than the US FED Raising Rates When.....<br /><br />House prices are at Record Highs....<br />Debt is at Record levels....<br /><br />Timo must have really had an effect on you Trollie.<br /><br />I think Rising Interest Rates might have more impact though.<br /><br />
You're just a play thing timo. Sorry.
Edited by Trollie, 15 Dec 2016, 08:58 PM.
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Simon_S
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Trollie
15 Dec 2016, 08:57 PM
No one is shocked you don't know what it means.

You're just a play thing timo. Sorry.
LOL....That went straight over the top of your head but not surprising......

Rates Rises getting to you Trollie?

What did Timo do to you Trollie? You can tell me........

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Jon Snow
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Rufus
15 Dec 2016, 08:44 PM
the banks assets is the shareholders equity, but that has to be held as Tier 1, 2, and 3 assets which are a function of it's loan book, or more correctly the loan book is a function of the shareholder equity.
Oh, so loans are not assets of the bank. Got it. :tu:

Speak when you are angry and you will make the best speech you will ever regret.
Ambrose Bierce
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Sydneyite
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Jon Snow
15 Dec 2016, 10:11 PM
Oh, so loans are not assets of the bank. Got it. :tu:
Re the collateral requirements of the RBA repo program for it's intervention in the overnight cash market, from here: http://www.rba.gov.au/mkt-operations/resources/tech-notes/open-market-operations.html

RBA
 
Collateral: The collateral type, which will be RBA Repo Eligible securities where the Reserve Bank is purchasing under reverse repos and either AFMA GC1 or a specifically nominated security when the Reserve Bank is selling securities under repos.
.....
Eligible securities for outright transactions are AGS and semi-government securities that are denominated in Australian dollars and are lodged and active in Austraclear at the time of settlement of an agreed transaction with the Reserve Bank.
And from APRA: http://www.afma.com.au/standards/market-conventions/Reciprocal%20Purchase%20Agreements%20Conventions.pdf

APRA
 
The AFMA definition of General Collateral (GC) is collateral that meets a non-specific maturity requirement but has a quality requirement. As distinct from GC transactions with the Reserve
Bank of Australia, a two-tier GC market, designated as “GC1” and “GC2”, is operated and classified as follows:

* GC1 – Actively traded AUD Commonwealth and Semi-Government Bonds. Treasury Notes and Commonwealth and State Government Indexed bonds
QED. Banks CANNOT use loan assets as collateral for overnight cash market loans from the RBA to make up liquidity shortfalls.
Edited by Sydneyite, 15 Dec 2016, 10:50 PM.
For Aussie property bears, "denial", is not just a long river in North Africa.....
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