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When the US defaults, what will become of my absurdly oversized homeloan?; Shall I begin hoarding canned food and ammunition?
Topic Started: 15 Oct 2013, 07:19 AM (2,275 Views)
ECMO
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Now, I wont pretend to understand this insanely complex global financial circus.
However, it seems that there are multiple intelligent decision-makers, in conflict and cooperation, operating in what seems like a non-zero-sum environment. The losses of one will not be offset by equal gains in another- there is the potential for losses sustained by all agents.

In context of this, I dimly appreciate some sort of threat. Like a rabbit in the wheat-field appreciates the distant rumble of the combine harvester.
Propaganda doesn't help: http://www.smh.com.au/business/default-will-make-08-crisis-look-tame-20131014-2viwv.html
And so, I ask you: what will become of our major banks when the US fails to pay their bills?
The fieldmice, intoxicated with the success of first home purchase - what will happen to their savings? Can the government access these legally, Cyprus-style? And what will happen to their massive 97%LVR loans? What can we expect from inflation under these circumstances?

I am unaware of any precedent for such a monetary-system-crushing Godzilla-like event in the global markets.

It would be wonderful if somebody knowledgeable would weigh in with their opinion.
That said, it would be equally wonderful if the rest of us uneducated legions would gibber mindlessly, as it makes for interesting reading.
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Shadow
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ECMO
15 Oct 2013, 07:19 AM
That said, it would be equally wonderful if the rest of us uneducated legions would gibber mindlessly, as it makes for interesting reading.
I can do that.

The US won't default - all debts can be repaid with a keystroke.

The debt ceiling 'issue' can be resolved as easily as this... http://pragcap.com/lets-end-this-debt-ceiling-debate-with-a-1-oz-1t-coin
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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ECMO
15 Oct 2013, 07:19 AM
Now, I wont pretend to understand this insanely complex global financial circus.
However, it seems that there are multiple intelligent decision-makers, in conflict and cooperation, operating in what seems like a non-zero-sum environment. The losses of one will not be offset by equal gains in another- there is the potential for losses sustained by all agents.

In context of this, I dimly appreciate some sort of threat. Like a rabbit in the wheat-field appreciates the distant rumble of the combine harvester.
Propaganda doesn't help: http://www.smh.com.au/business/default-will-make-08-crisis-look-tame-20131014-2viwv.html
And so, I ask you: what will become of our major banks when the US fails to pay their bills?
The fieldmice, intoxicated with the success of first home purchase - what will happen to their savings? Can the government access these legally, Cyprus-style? And what will happen to their massive 97%LVR loans? What can we expect from inflation under these circumstances?

I am unaware of any precedent for such a monetary-system-crushing Godzilla-like event in the global markets.

It would be wonderful if somebody knowledgeable would weigh in with their opinion.
That said, it would be equally wonderful if the rest of us uneducated legions would gibber mindlessly, as it makes for interesting reading.
Are you always such a nervous nellie seeing collapse of the world as we know it around every corner?

Fear is so debilitating, things are actually great in Australia right now. It is such a shame you cannot enjoy it worrying about such weird and far fetched and implausible happenings
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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ECMO
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Well, I am somewhat ill-equipped to judge the actual level of threat, which is why I started this thread, asking you steel-nerved veterans for your opinion.

I suppose I should rephrase my question in less emotive terms. We the economically illiterate cannot discriminate between real and imaginary economic concerns, and though I share your view that this default business is a far-fetched and unrealistic threat, I would still like to know what you think might happen if a default were to occur. What would that look like to us fieldmice, down on the ground?
Edited by ECMO, 15 Oct 2013, 10:30 AM.
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skamy
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ECMO
15 Oct 2013, 10:20 AM
Well, I am somewhat ill-equipped to judge the actual level of threat, which is why I started this thread, asking you steel-nerved veterans for your opinion.
Well as an oldie I am happy to tell you that I have lived with these Armageddon spruiking tales for all of my adult life and although we have seen two or three major downturns, property has always come through with good returns in the end.

The tales of woe from the gloomers get more ludicrous and more airplay when the economy is down in the dumps and many young people from new generations get sucked in at these times. I feel very sorry for these kids as they can miss out on great buying opportunities when the market is down and they shoot themselves in the foot by all of them dumping the gloom at the same time and rushing like lemmings to buy at the same time.

As you can see from my signature people have calling great depressions due to debt for a long time. I would not waste today worrying about them, they may happen but the odds are pretty low particularly when we are emerging from a crisis. Humans like to be happy and are very creative in making good economic outcomes for themselves. Move to a more positive life outlook than the one these doom merchants are selling, chances are it will serve you much better in the long term.

How is that from this steel nerved old wrinklie veteran of property investing? IMHO you are more likely to see lashes of cash than crashes to ashes from your property investment.
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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themoops
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Garth Turner reckons the US won't default for about 150 years, but he still reckons Canadian housing will crash.

We are identical to Canada.

http://www.greaterfool.ca/

It's an interesting question, I googled "how high can the debt ceiling go", I didn't spend much time on it but I couldn't find much.

Id like to get more of an idea of what Marc Faber is on about. He's the biggest doomer in the world, and very respected. Also Peter Schiff.

I think their idea is that at some point in time the rest of the world is going to say fuck you to the US having the reserve currency. I'm not sure.
Edited by themoops, 15 Oct 2013, 11:19 AM.
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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themoops
15 Oct 2013, 11:15 AM
Garth Turner reckons the US won't default for about 150 years, but he still reckons Canadian housing will crash.

We are identical to Canada.

http://www.greaterfool.ca/

It's an interesting question, I googled "how high can the debt ceiling go", I didn't spend much time on it but I couldn't find much.

Id like to get more of an idea of what Marc Faber is on about. He's the biggest doomer in the world, and very respected. Also Peter Schiff.

I think their idea is that at some point in time the rest of the world is going to say fuck you to the US having the reserve currency. I'm not sure.


Oh that is sad you are still keeping your hopes up for a cheap house in Sydney's lower North Shore.


Moops you gotta step out of the day dreams and face real life sometime. I feel so sorry for ya stuck in the doom and gloom when everyone else is coming out into the sunshine.


Australia is nothing like Canada our house prices have been stagnant or falling for the past few years while Canada has witnessed a little property price boom. Where do you get this dreadful information from? Sydney is playing catch up big time folk are predicting 20% gains not imminent crashes ya silly eejit.


BTW do you not remember what happened to the last person who tried to f--k with the US dollar as a reserve currency - I will give you a clue his initials were SH and as it happens he did not in fact have any weapons of mass destruction.
Edited by skamy, 15 Oct 2013, 11:30 AM.
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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themoops
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skamy
15 Oct 2013, 11:26 AM


Oh that is sad you are still keeping your hopes up for a cheap house in Sydney's lower North Shore.


Moops you gotta step out of the day dreams and face real life sometime. I feel so sorry for ya stuck in the doom and gloom when everyone else is coming out into the sunshine.


Australia is nothing like Canada our house prices have been stagnant or falling for the past few years while Canada has witnessed a little property price boom. Where do you get this dreadful information from? Sydney is playing catch up big time folk are predicting 20% gains not imminent crashes ya silly eejit.


BTW do you not remember what happened to the last person who tried to f--k with the US dollar as a reserve currency - I will give you a clue his initials were SH and as it happens he did not in fact have any weapons of mass destruction.
We're exactly like Canada.

China has explicitly said we should have a basket of reserve currencies, not just the US dollar. I'm sure Russia and some other countries would be on side with that one.

So we're just going to go and conquer them? Idiot.

Actually, the lower north shore took one of the biggest hits during the last gfc - 20%. But I'm not overly fussed where I live in Sydney. As long as it's not the south west, better off dead, or moving to Brisbane. :bye:

I just temporarily lost about 20 iq points talking to you. Yeesh.

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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herbie
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themoops
15 Oct 2013, 12:02 PM
We're exactly like Canada.

China has explicitly said we should have a basket of reserve currencies, not just the US dollar. I'm sure Russia and some other countries would be on side with that one.

So we're just going to go and conquer them? Idiot.

Actually, the lower north shore took one of the biggest hits during the last gfc - 20%. But I'm not overly fussed where I live in Sydney. As long as it's not the south west, better off dead, or moving to Brisbane. :bye:

I just temporarily lost about 20 iq points talking to you. Yeesh.
Now, now Moops - I spent a week in Sydney's SW pissed once - So quite enjoyed the joint! :lol

Yep, the Chinese 'n Russkies DO have WMDs - Which is a bit inconvenient; Given they ARE a bit serious about seeing the USD's status wound down a tad.

'N re the OP, ya'd have a massively deflationary depression on ya hands is my guess? The bulls' worst nightmare. Can't be allowed to happen of course.
Edited by herbie, 15 Oct 2013, 12:28 PM.
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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herbie
15 Oct 2013, 12:08 PM
Now, now Moops - I spent a week in Sydney's SW pissed once - So quite enjoyed the joint! :lol

Yep, the Chinese 'n Russkies DO have WMDs - Which is a bit inconvenient; Given they ARE a bit serious about seeing the USD's status wound down a tad.
When was that? 1970? Before it became like Compton? :lol

Yep, they've got massive armies, and we've got a bunch of people who hate their governments and each other, the last thing in the world we want is to fight a war for bankers and specufestors and each other.
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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