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The biggest negative impacts from the housing bubble; What is the worst damage being done to Australian society.
Topic Started: 23 Sep 2013, 06:20 AM (7,578 Views)
herbie
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Apologies re the Blues 'n Royals crack Shady - You 'n Strindberg would be much better placed becoming pollies ... :re:

But then who's to know? Maybe you both already are ...

You certainly both seem to have all the necessary quals.
Edited by herbie, 25 Sep 2013, 09:23 PM.
A Professional Demographer to an amateur demographer: "negative natural increase will never outweigh the positive net migration"
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Shadow
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Evil Mouzealot Specufestor

LOL, the bears are growing increasingly irate as house prices boom instead of crashing 40% (I recall the angry bears behaved the same way when the 2009 boom kicked off too). Some, like Earthsta, just vanish. Others stick around, but ramp up the level of random unprovoked abuse, impotent rage and temper tantrums.
Edited by Shadow, 25 Sep 2013, 09:42 PM.
1. Epic Fail! Steve Keen's Bad Calls and Predictions.
2. Residential property loans regulated by NCCP Act. Banks can't margin call unless borrower defaults.
3. Housing is second highest taxed sector of Australian Economy. Renters subsidised by highly taxed homeowners.
4. Ongoing improvement in housing affordability. Australian household formation faster than population growth since 1960s.
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skamy
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herbie
25 Sep 2013, 07:41 PM
Hey Shady, ya ever thought of joining up in the Blues 'n Royals? They got lottsa right proper talkin' little Inglush gentlemens there - Including 'Is Right Royal 'Ighness Prince bloody 'Arry - Ya should fit right fucking in - Like a hand in a glove - Or a Michael in a Paddy! LOL ... :re:
Are ya drinking again???

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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herbie
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skamy
25 Sep 2013, 09:49 PM
Are ya drinking again???
Aw Geez Skamy, give a bloke a break ... I just got sacked for Pete's sake! - And am LUVVING every moment of it!!! Gawd, with a bit of luck, no more work for me EVER I hope! ... :re:
A Professional Demographer to an amateur demographer: "negative natural increase will never outweigh the positive net migration"
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themoops
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Shadow
25 Sep 2013, 09:40 PM
LOL, the bears are growing increasingly irate as house prices boom instead of crashing 40% (I recall the angry bears behaved the same way when the 2009 boom kicked off too). Some, like Earthsta, just vanish. Others stick around, but ramp up the level of random unprovoked abuse, impotent rage and temper tantrums.
I think people like Shadow and the rest of the bulls are the worst thing about the bubble.

Normally they'd be outcast or thrown in jail, in medieval times declared as witches and warlocks and murdered in a very satisfyingly gruesome manner.

And maybe they know it?
stinkbug omosessuale


Frank Castle is a liar and a criminal. He will often deliberately take people out of context and use straw man arguments.
Frank finally and unintentionally gives it up and admits he got where he is, primarily via dumb luck!
See here
Property will be 50-70% off by 2016.
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skamy
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herbie
25 Sep 2013, 09:56 PM
Aw Geez Skamy, give a bloke a break ... I just got sacked for Pete's sake! - And am LUVVING every moment of it!!! Gawd, with a bit of luck, no more work for me EVER I hope! ... :re:
So I take it thats a yes.

Bad luck on the job (or maybe not) remember good old Julie Andrews and her windows opening when doors close. Sounds like you are well set up to live a de- stressed life. I would go the town houses BTW - less bothersome tenants :)

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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herbie
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skamy
25 Sep 2013, 10:15 PM
So I take it thats a yes.

Bad luck on the job (or maybe not) remember good old Julie Andrews and her windows opening when doors close. Sounds like you are well set up to live a de- stressed life. I would go the town houses BTW - less bothersome tenants :)
You're a hard, hard colleen Skamy - So yep, that was a yes ... :re: But I'm just amusing meself with a bit a gratuitous bull baiting while I consider what I'm gunna do with me cash.

But yep, I STILL reckon those two dudes are crook - My gut just screams so. 'N I didn't get to have a couple of mill in assets without loading up on lots of leverage whilst also NOT listening to me gut ...

Irrespective of their poor bugger me protestations to the contrary, that pair are crook alright.
Edited by herbie, 25 Sep 2013, 11:38 PM.
A Professional Demographer to an amateur demographer: "negative natural increase will never outweigh the positive net migration"
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genX
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Roughly, in order.

1. There is no positive correlation between rising house prices and business startups. In fact, the opposite is true, the faster house prices rise, the faster business startups decline. The claim that most new business startups borrow against their equity in the house to fund the startup is demonstrably FALSE. The majority of business startups are funded by individual or pooled savings (i.e. GROSS CAPITAL FORMATION Glen Stevens you STUPID TURD). Home equity is commonly used by established businesses to fund expansion of the business, not in it's formation.

2. The correlation between rising house prices and consumer spending is not a function of the house prices, but the relationship between debt and income. That is, it is rising debt that fuels rising consumer spending, not the rise in price of the houses themselves. But debt needs to be repaid in the future, so fast rising debt will eventually result in a contraction in consumer spending during the tightening phase of the cycle. The net effect is zero. The only beneficiaries of the easing part of the short term debt cycle are politicians, whose electoral cycle is shorter than the business cycle, bankers, who fill their balance sheet with assets, and the real estate industry, which employs less than 2% of the population, but earns income highly disproportionate to this during 'booms'.This short video explains it better than I ever could.
http://www.economicprinciples.org/

3. Rising house prices are inflationary. People need higher wages to buy a house, and business owners need to put their prices up to pay for the higher wages. In a closed system this can go on forever, but if your economy relies on imports (such as oil) to run, you will need to produce something of value to trade for your imports. As wages rise, your economy needs to produce more goods to pay for the imported goods, which has a drag effect (like a tax). If you do not raise production, the value of your currency will drop, requiring even more goods to trade for your imports. Eventually, either wages will fall, leading to reduced purchasing power and falling asset prices (deflation), or the traded value of your currency will fall to zero, and the parts of your economy that relied on imports will grind to a halt. (In a closed system the median house price could go to 100 billion dollars as long as the median wage was 12 billion dollars).

4. Rising house prices divert time, effort, resources and capital away from activities that increase productivity. Rising productivity is deflationary, so the negative effect is compounded i.e. you get the inflationary effect of rising house prices, but lose the deflationary effect of productivity increases. The compounding effect described above is why bubbles can form suddenly at the end of a boom. For much of a boom, the inflationary effect of rising house prices is offset by the deflationary effect of productivity increases. As the boom goes on without apparent end, the last holdouts in the productive economy are squeezed out by rising costs and wages, and eventually lose access to capital. They either raise their prices (which will work temporarily, but not for long because of substitution), or downsize/close their business. At this point either inflation or unemployment takes off (unemployment is also deflationary, because the unemployed don't spend much money). If inflation takes off, the central bank usually raises rates in response, sending the highly leveraged at the margins into illiquidity, and they are forced to sell down their holdings to cover their repayments (margin call). If unemployment takes off, the central bank will lower rates, sending house prices even higher until the market runs out of credit capacity, leading to a rush for the exits for those who are cashflow negative.

That's probably enough for now.
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peter fraser
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genX
25 Sep 2013, 10:28 PM
1. There is no positive correlation between rising house prices and business startups. In fact, the opposite is true, the faster house prices rise, the faster business startups decline.
Getting finance for a startup is incredibly difficult, and using the equity in a home is probably the only hope that most people have to get startup finance. I'm not talking about someone starting a major enterprise, just a small business.

Even if someone has the equity it's difficult, and without equity it's almost (but not quite) impossible. Banks won't lend in this space when property prices are falling. Australian banks are bricks and mortar lenders.
Edited by peter fraser, 25 Sep 2013, 10:42 PM.
Any expressed market opinion is my own and is not to be taken as financial advice
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Timo
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mango66
24 Sep 2013, 07:57 AM
I choose the button that says all the above. I also would point out every bull that posted here would be at greatest risk of financial martydom when things go bad. So thanks for the replies.
+1
After a bubble has burst, no one denies that it existed. But before it does, the popular refrain is that though bubbles existed elsewhere in the world, “there’s no bubble here”. So housing bubbles are admitted to have existed in Japan, the USA, Spain and Ireland – because they’ve already burst.
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