Australia heads for economic crunch

Discussion in 'Markets & Economies' started by millededge, Jan 3, 2011.

  1. ChunkyPM

    ChunkyPM New Member

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    It was only a month or so ago i had my first pleasure of eating goat meat. Couldn't believe how well it came up in the pressure cooker at the restaurant. A lady at the table ask me what i thought and then told me that per kg it's cheaper than the ordinary meats we buy at the butchers. What surprised me was that she grows cattle and buys alot of goat meat, also she said its alot leaner and healthier than the others.
    The one that is going to cause alot of time to come around is the horse meat that Australia has only just passed by law that humans can eat. When my parents leased a piggery of some Japanese 20 odd years ago this is what they wanted to do. Fatten up horses and send them as live export to Japan. This is one market that will turn into a bull market until the right breed is found for the meat. It's different but times are changing!
     
  2. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

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    Sorry AgOx, it is true. And it doesn't astound me at all what is available to Sydneysiders. I agree with all of your observations and yes there are markets for and champions of specialty produce and they have existed for at least 30 years, re Maggie Beer. And while initially catering to a minuscule proportion of the population, the consumer base has widened. But it is not mainstream. Until it becomes mainstream it will remain a market mainly pandering to the trendy, the well off or those few who actually give a damn about what they eat and in the end don't mind paying for the privilege of eating food which has not been artificially fertilised, artificially protected from pest and disease or genetically enhanced. And I can tell you one thing, the big chains will exploit the organic market long before a small local farmer can eventually sit back and say, "I've made enough money, I don't need to work my paddocks anymore." Coles is doing it now.

    Small farms are extremely hard work to make economically viable. How many of the farmers that you buy produce from are under 25? Most are older people who have worked the land for years and have had their small acreage land for years, they don't owe a million dollars. Many of those farmers also produce for the mass market and utilise the local community market as a source of cash in hand for excess stock. I can also tell you one thing, if your local farmer at the small market hasn't got any of his own zucchinis to sell cause he's run out, he'll buy them from somewhere else and sell them to you rather than not go to the market. And there's no way I would ever buy those delivered organic vegetable boxes you see advertised in cities. Overpriced outrageously. A complete ripoff, they must use gold dust to print the letters O-R-G-A-N-I-C on the boxes.

    "Australians eat 2.7 million meals at large fast food restaurants every day and one in every $3 we spend on food is on meals prepared outside our homes." http://www.sciencealert.com.au/opinions/20080804-17160.html

    Mate, the standard meat and 3 veg (yes you did say potato) is not a growing minority (though I don't know what that means), it's a shrinking majority, but there's nothing wrong with meat and 3 veg anyway. And the pizza you buy from your average pizza franchise is as far removed from real Italian pizza as crab sticks are from crustaceans.

    I don't watch Master Chef.
     
  3. Guest

    Guest Guest

    I haven't eaten at Maccas, KFC, Pizza Slut or any of those other chains in years. I refuse to eat it. I admit I am one of those Sydney food snobs who'd rather rent and eat well than buy a POS 500k fixer upper in a crime ridden area of Sydney to follow the 'Australian Dream' (tm).

    I care about what I eat and what my family eats. Very much so in fact!

    But alas, exceptions don't make the rule and the amount of shit people I know eat on a daily basis... well, there's no words to describe it [email protected]
     
  4. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

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    What does POS stand for?
     
  5. Apollo

    Apollo New Member

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    "Piece of Sh!t" :cool:
     
  6. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

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  7. Peter

    Peter Well-Known Member

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    POS stands for price of silver.
     
  8. Stedlar

    Stedlar Active Member

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    I live in nice area, and from time to time enjoy takeaway food. It tastes nice, and it's a treat for the kids. Australian produce is amongst the best in the world.

    I did rent for a little while, a long long time ago, but saved really hard and denied myself many things to buy my first house. It was not really where I wanted to be as it was a fair way out, but I worked and saved hard to pay it off, before upgrading to my next, which was closer in. I see renting as such a waste of money, in my opinion. I could not stand it to be in a position where I was funding someone else's life style with my hard earned dollars or that the house where my kids are growing up in could be sold out from underneath me.

    I guess we all make the choices and live with them. There were times when my low income and high debt meant that things were tough. It was not easy to keep paying down a loan , when driving an old car, and with friends going overseas and such. That redraw looked so tempting. But it's about choices. Now I can move my kids from the public school they are attending to a private school. The fees are high, but not as much as my mortgage repayments were.

    When the hard times come to Australia, as I believe they will, I won't have to worry about my rent going up, or interest rates rising on my mortgage. But I will feel sad for all the people who will be put onto struggle street. In fact I would if I could have Australia miss the whole recession thing entirely.
     
  9. errol43

    errol43 New Member Silver Stacker

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    Stedlar Would you borrow $300k or $400k to buy a house to day.? My sons refuse to play the game of being a debt slave for 30years with the added worry of interest rate rises plus always being well aware that both you and your partner must have full time employment to fulfill your dream.

    Regards Errol 43
     
  10. malachii

    malachii Well-Known Member

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    Debt slave or Rental slave - which is better?

    I'm actually not a fan of either (I know - not really an option) - both have advantages and disadvantages. My big concern is people who say they dont want a 30 year mortgage so they rent but never actually do any investing at all. They then complain they have no assets and the landlords are ripping them off and they have no other option whereas if they had made the hard decisions earlier - they would own at least part of a property they would then have options.

    In my opionion (and I know this is different to a lot on this forum) is if you dont want to buy where you live - rent there but buy somewhere else and rent it out. This gives you the obvious tax advantages, allows you to buy somewhere "more affordable", someone else helps pay off your asset and makes it so you dont get left behind if the market booms.

    malachii
     
  11. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

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    Stedlar and Auspm, just love to hear the opposing views. Having been down this path in my life, borrowed money for first house when I was 30, nearly 20yrs ago - was actually going to adopt a position of rent for life and invest the savings in the share market - but with so much well intentioned advice from friends, and in particularly family, we decided to buy. We are now a part of the RE Machine. Don't know where we'd be now if we'd stuck to our original plan. I don't know what's right or wrong, but I think it's brilliant for members of this forum to see that there are alternative views to the "Great Australian Dream"tm.

    When my wife and I were deciding whether we should buy a house or not, and initially decided to rent, we thought there must have been something wrong with our decision because everyone else we spoke to said we needed to buy a house. No crystal balls out there, you just need a clear objective, have some sound logical plan and back your judgement. And have no regrets.
     
  12. Stedlar

    Stedlar Active Member

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    I'll tell you what I did. When I was earning $25k working in retail and my wife was earning $22K, we saved up $50K, and took out a $90K loan over 20 years at a variable rate of 11%. We had a house built. It was 12 squares, no garage, no pergolas, no driveway or landscaping. Not even fences. For the first few years we had blankets and sheets on the windows instead of curtains. We paid that loan off in 9 years. We did not get fancy furniture; we did not buy a new car. We both drove old cars.
    Over time, we worked on that place, got the landscaping and all done, built the pergolas, all the other stuff. But we did it ourselves to save money.

    We bought that house in 91. The property market tanked at about the same time, and then there was that recession, and retails not the greatest place to work in a recession. So at time things got pretty tight. But as we were always ahead on the payments, we were ok. By the time we had paid the loan off in 99, the house was just worth what we had paid for it. We sold it and bought in closer to the city. By that time I was earning $40k and my wife was earning $34k. We borrowed $195K to make the difference between the two properties. This was a 30 year loan.

    Once again, pay off loan as fast as we can. However 1 year after we bought, 1st kid comes along, wife can't work. Fortunately we were ahead on the loan enough to give us a buffer. So we just kept doing what we could to save what we could as best as we could. Three kids later, wife has never returned to work as she does not have to. We have the nice cars; all the old furniture is gone. But the best thing is the kids have a mum at home, and we can provide for them. Their lives will not be impacted by interest rate or rent raises.

    Now I compare that with people who want to buy today. They want McMansions, in the right location, they want the place fully fitted out, and they want all the correct furniture, and they want the new car in the double garage, and they want to buy their $5 cups of coffee, and see the latest movies. And they are not prepared to wait.

    I understand that $400k seems daunting, but the maths of compounding returns can work for us as well as against us. We just have to be prepared to forgo things now to be able to pay down the debt as hard as we can at the start of the loan. And if we aren't prepared to make that sacrifice, then fine. It's about individual priorities. We make our decisions and live with them.
     
  13. errol43

    errol43 New Member Silver Stacker

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    Stedlar. I went down much the same road as you did. My wife and I have lived in four houses. Paying off 2 and buying the last 2 outright but only owning one at a time but the house I now live in , I must admit is the biggest and near the beach.

    But if I was starting off again I would be terrified if I had to commit to a $400k loan to buy a house that is much like the first one we bought. I know I was a little apprehensive when buying the first house for $22k with a deposit of $10 but it all worked out well.

    Would I do it today? No way! The times have changed. Young people sure have hard decisions to make these days.

    Tell us what you would do today if you were just married.

    Regards Errol 43
     
  14. Stedlar

    Stedlar Active Member

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    It's about the life style you are prepared to lead. No credit cards, no car loans, no expensive holidays. Living well within your means. Never spending windfalls like tax returns or bonuses.

    I work with people who have car loans, iphones, big TVs, go out on the weekends and spend a small fortune on meals and drinks. They buy coffee, and lunch and go on overseas trips. And they still live with their mums and dads, or rent.

    Then there are the ones who've borrowed to buy a new house and they borrow to furnish it. No time for waiting, everything now. Certainly no thought to paying off more than the minimum repayments.

    If I was starting again I would do pretty much what I did already. I would buy the house and take the life style hit, and the risk, and work to be debt free.

    Others look at what they want out of life and decide they want other things more. That's fine but you can't both have your cake, and have eaten too. It's either eaten or saved.

    You make your decisions, based on your best understanding at the time, and no regrets.
     
  15. Guest

    Guest Guest

    The house prices in this country are 200%+ above long term trends.

    It's not even a question of lifestyle choice, but rather practicality. The bottom line is this.

    If you bought pre-2000, yes, it was hard. The Recession we had to have burned many and jobs were tough to find. But 200k bought you a friggen mansion in most areas and a very nice place in most capitals. Add in wage appreciation of the 2000-2010 boom period and you did wonderously well.

    Fast forward to 2007 and unless you're on a triple figure salary or dual income with no kids, you were pretty well shit out of luck.

    The Australian housing market :

    [​IMG]

    You and people like you bought pre-2000 and it's obvious what the difference is today.

    If it was pre-2000 and you could afford it, of course it was a good idea.

    If you bought after and especially today?

    You're a debt mule living on borrowed time.

    For most people, there was no decision here. No option. You either swallowed 200% the debt level of the decade before for the SAME THING and hoped to god the interest rates didn't kill you or you/your partner didn't lose their job, or you went without and became a renter.

    Whether or not you buy iPods or play video games has next to no practical relevence today when house prices are double what they were a single decade before and THAT is a fact. 'Saving' in the traditional sense ceased being relevent when we moved to a climate of 105% home loans with no deposit requirements, extended mortgages and government handouts.

    The PRIMARY driver for housing affordability in this country is NOT savings. It's CREDIT!

    How much you can borrow. How much you can afford to repay.

    There is a reason now why the average age of first time parents (for the first time in Australian history) is now over 30.

    May as well throw the rules book out now folks. It's a completely different game now.
     
  16. Stedlar

    Stedlar Active Member

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    Yes, it is always different now. All the rules have changed. It is so much harder. Poor people, who have it so hard, not like the easy ways of days gone by. Nope, it's harder and meaner and more difficult and the rules don't work like they used to. The old days were so different, and look, here are all the reasons that prove that it's not like it was. Not easy anymore. It's hard and risky now. Not like back then. And it doesn't matter if I piss all my money up the wall, cause it wouldn't make a difference, cause it different now. Harder
     
  17. Dwayne

    Dwayne New Member

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    Except that in some demonstrable and measurable ways it is different now - or did you not actually read auspm's last message?

    I agree that most people piss their money away and deserve everything they (don't) get - but no objective person can look at the facts and not recognise that it takes a far greater proportion of income to buy an average house than it did 15+ years ago.
     
  18. Stedlar

    Stedlar Active Member

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    No it's not different. You can quote your affordability numbers all you like, but it has and always been about what sacrifices people are prepared to make. Where they are prepared to move to, what luxuries and wants they are prepared to forgo.

    I could not afford to live where and like I do now if I had not lived where and how I did then. It was not easy, but it was the choice I made. We all make our choices.

    By the way, not owning a house is a valid choice. It just wasn't the one I wanted.
     
  19. Dwayne

    Dwayne New Member

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    you can have your own opinion but you can't choose your own facts
     
  20. THUCYDIDES79

    THUCYDIDES79 New Member Silver Stacker

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    Great website hotel 46 - thanks heaps
     

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