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4 Corners Housing Bubble thread; To be broadcast 21st August 8:30pm
Topic Started: 15 Aug 2017, 03:08 PM (12,964 Views)
Veritas
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Rufus
23 Aug 2017, 09:35 AM
Yep, it is.

Same with Spain BTW - Australia is noting like Spain either. You guys must enjoy clutching at straws.

That's actually just laughable. You are still clutching at the wrong straws, but please keep doing it, we find it amusing.
No wonder b_b can't be bothered talking to you anymore. People follow your advice at their peril.

Cheers
Well you might as well spell out the whole theory.

Australian banks cannot collapse because if they get in trouble the RBA will just make them whole with freshly minted AUD.

No wonder the banks are not worried about their exposure to mortgages then.

They cant go bust according to you

Rat
23 Aug 2017, 10:37 AM
Yes, Australia vs Spain makes another interesting "compare and contrast exercise".

Posted Image

At the end of the day, the recent Sydney up-cycle has been driven by the normal fundamentals - supply, demand and affordability. And now the up-cycle is coming to an end as those fundamentals deteriorate - i.e. strong price gains have resulted in worse affordability, construction boom has created higher supply, and APRA-driven rate increases and foreign investor controls have reduced demand. Basically a reversal of the drivers that caused the up-cycle in the first place. So Sydney will have another one of its regular cyclical corrections, while other cities like Perth will begin their up-cycles.

This is all just further evidence of the property cycle doing its thing, as it always does.
More lessons from the property cycle handbook that exists only in your own mind.

Repeated attempts to produced one (even one) decent academic text that supports your theory of the behaviour of property markets have met with silence.

The best you could do was provide a link to some property spruiking hack in New Zealand.

According to you there is no link between the very unusual event that was the GFC the effect it had on global monetary policy and the effect that that had on property prices.

Nebulous nonsense about magical property cycles are no substitute for examining what actually happened but you don’t want a bar of that.

For you to be right, the property cycle would have to have caused the GFC because without it it is highly unlikely interest rates would have hit the floor and the Sydney bull run would have been still born.
Edited by Veritas, 23 Aug 2017, 12:26 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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Rufus
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Veritas
23 Aug 2017, 12:17 PM
Well you might as well spell out the whole theory.

Australian banks cannot collapse because if they get in trouble the RBA will just make them whole with freshly minted AUD.

No wonder the banks are not worried about their exposure to mortgages then.

They cant go bust according to you
Banks can certainly go bust. Once they suffer losses that are more than the shareholder equity they are bankrupt.
The government then has to make a decision - do they nationalise the bank or lend them money to get through their difficulty. In the USA (a currency issuer like us) the government pumped money into the banks reserves because they could. After the crisis the banks paid them back.

In Ireland who are not currency issuers like us, the government nationalised the banks. To recapitalise their nationalised banks they borrower heavily on the markets (because they can't create their own money) at high interest rates which cost Irish citizens a lot of extra money in taxes.

Luckily for Ireland they are a tax haven and they collect a lot of taxes from Tech companies who have corporate head quarters there, so they got off quite lightly, unlike Spain, Portugal, Italy, Greece etc.

We are like the USA, but not like Ireland, Spain, Portugal, Greece etc. What we don't have in common with the USA is NINJA loans.

But believe anything you like, it doesn't concern me which God you worship.


Take risks - if you win you will become wealthy, if you lose you will become wise
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Rat
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Veritas
23 Aug 2017, 12:17 PM
For you to be right, the property cycle would have to have caused...
Incorrect. The property cycle does not cause anything.

The property cycle is caused by changes in the fundamental drivers that influence the direction of house prices - supply, demand, affordability etc.

We've been through this countless times, but you're incapable of grasping it. That's why it's best for people like you to rent forever.
Edited by Rat, 23 Aug 2017, 01:23 PM.
Consumer protection laws extended to small businesses. Banks not permitted to repossess due to non-monetary defaults (for example, a fall in the property value).
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channaylor
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Australia's economy is sound despite being in a period of low growth, low inflation, low interest rates and low wages growth. This means investors can't expect a strong capital growth in property prices but the environment is more stable. What can you do during this period of slow growth?

It's not a wrong time to invest but it is important to be more careful and critical in selecting a resilient and potentially profitable property.
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Simon_S
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Rufus
23 Aug 2017, 12:14 PM
If that is bear logic it is wanting.

It's not silly to say they are different when they are different.

Come back when Australia joins the EU and uses the Euro as it's unit of currency, then I may agree with you.

In the meantime we have our own currency which we can't run out of, we can adjust our interest rates independently of other countries, our currency automatically adjusts in the exchange rate, and our government can stimulate the economy if need be as Rudd did in the GFC. What do you think the Snowy Hydro Scheme was about post WW2 - water, electricity, or creating jobs and gaining engineering expertise we didn't have at the time.

Anyone who doesn't take the differences into account is a little silly, don't you agree?
So your logic is Countries that have their own Currencies don't experience property crashes?
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Rufus
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Simon_S
23 Aug 2017, 02:25 PM
So your logic is Countries that have their own Currencies don't experience property crashes?
Sooner or later you will have to learn to read and interpret correctly instead of this naïve bluster that you regularly come up with.

Cheers
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
23 Aug 2017, 02:31 PM
Sooner or later you will have to learn to read and interpret correctly instead of this naïve bluster that you regularly come up with.

Cheers
Nah........Just picking the myriad of holes in your argument as usual.

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b_b
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Rufus
23 Aug 2017, 01:04 PM
Banks can certainly go bust. Once they suffer losses that are more than the shareholder equity they are bankrupt.
The government then has to make a decision - do they nationalise the bank or lend them money to get through their difficulty. In the USA (a currency issuer like us) the government pumped money into the banks reserves because they could. After the crisis the banks paid them back.

In Ireland who are not currency issuers like us, the government nationalised the banks. To recapitalise their nationalised banks they borrower heavily on the markets (because they can't create their own money) at high interest rates which cost Irish citizens a lot of extra money in taxes.

Luckily for Ireland they are a tax haven and they collect a lot of taxes from Tech companies who have corporate head quarters there, so they got off quite lightly, unlike Spain, Portugal, Italy, Greece etc.

We are like the USA, but not like Ireland, Spain, Portugal, Greece etc. What we don't have in common with the USA is NINJA loans.

But believe anything you like, it doesn't concern me which God you worship.

Nice summary.

Or to put it another way, liquidity is different to solvency.

Also there are rules as to how banks can access liquidity. Only certain collateral is accepted by the central bank (http://www.rba.gov.au/mkt-operations/resources/tech-notes/eligible-securities.html). If a bank is short eligible securities, no amount of "money printing" by the RBA will help.
Edited by b_b, 23 Aug 2017, 02:47 PM.
(S – I) + (T - G) + (M - X) = 0
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Simon_S
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b_b
23 Aug 2017, 02:44 PM
Nice summary.

Or to put it another way, liquidity is different to solvency.

Also there are rules as to how banks can access liquidity. Only certain collateral is accepted by the central bank (http://www.rba.gov.au/mkt-operations/resources/tech-notes/eligible-securities.html). If a bank is short eligible securities, no amount of "money printing" by the RBA will help.
Your link isn't working.
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Rat
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Filthy Rodent

b_b
23 Aug 2017, 02:44 PM
Only certain collateral is accepted by the central bank http://www.rba.gov.au/mkt-operations/resources/tech-notes/eligible-securities.html
Simon is out of his depth again. It's probably time for some bwahaha-ing.
Consumer protection laws extended to small businesses. Banks not permitted to repossess due to non-monetary defaults (for example, a fall in the property value).
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