Subprime loans were ones that were lent to (as an example) the minimum wage earner to buy the million dollar mansion. The crack whore buying the new Escalade and the pet dog getting a diamond encrusted collar.
Ignore posts by The Whole Truth · View Post · End Ignoring The forum fuckwit goes RRRAAARRRGGHHhhh - But not a fuck was given..................by anyone.
Subprime loans were ones that were lent to (as an example) the minimum wage earner to buy the million dollar mansion. The crack whore buying the new Escalade and the pet dog getting a diamond encrusted collar.
my reference to the GFC/Subprime was to counter Shadow's argument that there's nothing unusual about the current market, that it's part of a natural cycle.
It wasn't to meant to draw analogies in the behaviours of individuals that led to a bubble being formed.
"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.
IO loans have been around in Australia for many years, probably decades. They have certainly been around for the past decade while house prices have tracked incomes.
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It's called 'kicking the can down the road'. Private debt is still at unprecedented high levels. The downward trend is negligible.
There's no reason why it can't cycle up and down close to current levels indefinitely. It doesn't have to rise to infinity and disaster or collapse to disaster either.
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Please explain, if this is just catch up, why FHBs are still a small segment of market
FHBs are a currently a big segment of the market in WA. They are a small segment of the market in NSW and QLD because they were a huge segment of the market there during the 2009 mini-boom as a result of grant boosts. When the grants were removed the numbers fell because FHBs now had to save for longer for a deposit. In recent months the numbers have been rising again. FHB numbers cycle up and down in response to interest rates, grants, economic conditions etc (just as house prices cycle).
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Please explain how the GFC/Subprime fits into your theory of cycles
Prior to the GFC, house prices and construction activity rose very strongly in some countries like the USA, Spain and Ireland. Prices then peaked and experienced a correction commensurate with the strength of the upcycle. Now that correction has ended and prices in those countries are on the rise again. All part of the cycle.
No it's not. A rising proportion of IO loans would indicate increasing investor activity.
Yes, that's what I said.
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Do they. Do they really? Which people? Whose wages are stagnating? Evidence of this happening please...
I'll let you look up the ABS numbers yourself. The disposable incomes of the bottom 2 quintiles have been stagnating since 2009.
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Why would those events be a prerequisite for Australian house prices to continue tracking income growth?
We run a trade deficit. Peak oil production in Australia was 1983, which means that moving forward we will progressively import more oil. If our wages continue to climb, our exports will become uncompetitive in price, so our trade deficit will continue to widen, particularly for oil. (Or the RBA will continue to lower the OCR and our dollar will continue to fall, causing the trade deficit to widen). If we colonise East Timor, we will become an oil producer again. If we switch to an electric economy, we have 300 years worth of Australian consumption of black coal to produce electricity (and probably 1000 years of brown coal).
Income in low and middle income households grew by over four per cent between 2009-10 and 2011-12, according to a report released today by the Australian Bureau of Statistics (ABS).
"Growth in household income stalled after the global financial crisis," said Stephanie Cornes, Director of Household Economic Resource Surveys at the ABS, "but figures from 2011-12 released today show that household incomes are recovering."
"Low income households have seen an increase of five per cent from 2009-10, and middle income households have seen an increase of four per cent.
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If we colonise East Timor...
House prices have managed to track incomes for a decade without us having to colonise East Timor.
Can you put a rough timeframe on when you believe the colonisation will become necessary?
even though we are supposedly in a decling eceonomy
works greta until it doesnt anymore
When does it stop working Ted?
Sydney house prices are up 10% since you sold your Sydney home to pile into gold (while gold is down 20%)
So I think I'll take your financial advice with a pinch of salt...
You forget to mention anything about everything else I said, are you cherry picking from your backdoor again shadow. I have made more than that on two simple silver plays . there is much more to invest in than RE . I still have RE just not as much as I used too. I told you I am more of a silver man ,the last play I made was when I last posted on here when telling you all what a bargain silver was at 18 us dollars , it was 20 aus dollars then, I will admit i cashed out at 26 dollars but it did go further to around 27.50 for that run which would have given me closer to a 40% return instead of the 30% I took and that was only in a matter of weeks not the ten years you have been hoping for a simliar return on your northern beaches property still at around levels of ten years prior, which I have shown before. I told you about my prior run after also purchasing a 1/4 tonne at 20 but you never listen , your too worried about your interest only loans. look over the last ten years and you will see that in june evwry year gold and silver take a hit in late june before bouncing back. I only own some gold coins , there is more to be had in gold shares when you know what to look for , take the top five gold shares for example , buy late june , sell a couple of months later when the hysteria dies out. my best play there was sbm , bought at 42 cents in late june and cashed out in august at 78 cents , I should of cashed at at 93 cents but missed the boat , dont always get it right , but have a stop loss and know what your doing its not that hard shadow. I handed you all returns of 50% before in a matter of months last year, have also given you all RE areas with 20% increases, but all I get is abuse from morons. so good luck
I handed you all returns of 50% before in a matter of months last year...
Ted, you came on to this forum in 2012 (as Dave289) promising a massive house price crash and claiming gold would go to the moon.
You said you had just sold your Sydney home and piled the proceeds into gold, and that you were now living in your brothers shed.
But then gold crashed, and Sydney house prices boomed, so you changed your identity (multiple times) and came up with increasingly tangled stories to try and convince us you haven't just taken a massive hit by selling a Sydney home right before Sydney house prices boomed and piling all your money into gold right before it crashed.
Your original story was the true one. The rest have just been your attempt to save face.
House prices have managed to track incomes for a decade without us having to colonise East Timor.
Because a decade is such a long time. How about in the 1/2 decade prior to that?
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Can you put a rough timeframe on when you believe the colonisation will become necessary?
You are assuming wages will rise with house prices, I am not. In fact, it is more likely that real wages will stagnate or decline in the next 3-5 years while house prices continue to rise. The shortfall in domestic buyers will be made up for by foreign buyers and ever increasingly leveraged PIs. Unless we reverse course now, I would expect asset prices to rise substantially while other sectors of the economy continue to decline or die out altogether. We will become a true Banana Republic.
However in the unlikely scenario where wages rose with asset prices, i.e. double digit increases in AWE per year for as long as this credit fueled asset boom goes on, and the dollar remains above 90 cents, then within 5 years all but the most niche of manufacturing would be gone, capital investment in mining projects would dry up altogether (as high wages made it unprofitable), and eventually we would see very high inflation, capital flight and a spectacular crash in financial markets, taking the BBs retirement funds with it.
In either case, I would recommend you load up on debt and buy 10-20 more properties.
We run a trade deficit. Peak oil production in Australia was 1983, which means that moving forward we will progressively import more oil. If our wages continue to climb, our exports will become uncompetitive in price, so our trade deficit will continue to widen, particularly for oil. (Or the RBA will continue to lower the OCR and our dollar will continue to fall, causing the trade deficit to widen). If we colonise East Timor, we will become an oil producer again. If we switch to an electric economy, we have 300 years worth of Australian consumption of black coal to produce electricity (and probably 1000 years of brown coal).
As the US moves to be self-sufficient with oil and we become more efficient uses of it the price of oil will trend down to $50 a barrel. This will also diminish the importance of certain middle Eastern producers stabilising that region for the first time in multiple decades.
Oil isn't going to be a problem for the foreseeable.
“You Keep Using That Word, I Do Not Think It Means What You Think It Means” - Inigo Montoya
Because a decade is such a long time. How about in the 1/2 decade prior to that?
You are assuming wages will rise with house prices, I am not. In fact, it is more likely that real wages will stagnate or decline in the next 3-5 years while house prices continue to rise. The shortfall in domestic buyers will be made up for by foreign buyers and ever increasingly leveraged PIs. Unless we reverse course now, I would expect asset prices to rise substantially while other sectors of the economy continue to decline or die out altogether. We will become a true Banana Republic.
However in the unlikely scenario where wages rose with asset prices, i.e. double digit increases in AWE per year for as long as this credit fueled asset boom goes on, and the dollar remains above 90 cents, then within 5 years all but the most niche of manufacturing would be gone, capital investment in mining projects would dry up altogether (as high wages made it unprofitable), and eventually we would see very high inflation, capital flight and a spectacular crash in financial markets, taking the BBs retirement funds with it.
In either case, I would recommend you load up on debt and buy 10-20 more properties.
Trade deficits are a national benefit. We get real goods and services, and in return we send a bank statement domiciled in our own fiat currency.
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