Warnings of an asset crash just went mainstream: "correction" likely

First the RBA warning, and now this.

How many minutes to midnight on the crash clock now?

Earlier RBA warning: http://www.businessinsider.com.au/t...investors-to-be-wary-of-low-volatility-2014-8

 

Let's be 100% clear what the risk relates to:

 

Holding more capital goes against the high risk yield hunting roulette table like investment strategies of banks these days. I say go all in and get the show on the road already. My patience is wearing thin on this inevitable financial collapse. I've got other things I need to do.

 

I guess that's why the Australian banks now do a mini 31 day bail in on all customer term deposits.

 

Does anyone know by chance how much money is tied up in TDs with Australian banks? Would this also include retail superfunds with cash holdings?

 

No lets be perfectly clear. If you have a deposit you are well and truely F#@ked because your deposit will be exchanged for shares of the bank which is insolvent. Of course the bank will split into two banks the insolvent one that you hold shares in and the solvent one that holds mortgages of people who were smart enough to hold assets outside the banking system that the bank cannot access.

The problem has never been the property market the problem is the crooks who play funny buggers with the share market and who will try and make out that private investors that control property are the problem.

Kind Regards
non recourse

 

Property investors in Australia are all feeling like geniuses right now

just like property investors in Japan were in 1988

 

If the property is heavily geared then just like every other investment that is heavily geared it is at risk. HOWEVER IF THE PROPERTY TITLE IS CONTROLllED OUT RIGHT compare that to a share with no gearing which would you rather control in a crash ?

You notice I didn't say owned but controlled

Kind Regards
non recourse

 

Denial isn't a river in Egypt.

 

You may be correct, but... and this is a really BIG but, Japan had strict foreign ownership regulations while Australia has transformed property into a global investment product with a very large demand base.

 

That was exactly the thought that occurred to me. If one believes that TPTB will sit on their hands and let the banking system and government regulators take their medicine for their fuelling of a speculative housing bubble, then one has not learnt anything much.

They will protect the banks, the regulators and the speculators by appropriating everything they can get their hands on to keep "the system" going, regardless of how crooked it has become. They are, in fact, doing it right now by setting up this narrative. In fact, they have been do it for the past few years with ring-fencing the self-rated, sub-prime RMBS the banks sell to themselves through special purpose vehicles by setting up the Committed Liquidity Fund at the RBA that starts legal operation next year.

 

Being a chicken little running in circles squawking that the sky is falling in is what "normal" people do because they are not investors they are lemmings rushing to be first over the cliff. There is no denial the next crash is imminent but the real question is considering all assets are going to be devalued which asset class or mix will allow the educated real investors to rise out of the ashes like a phoenix and prosper from the misfortune of the lemmings?

I think it is very unfortunate that this site has so many knockers who are drooling at the prospect of a property collapse. Comparing the (so called) "Australian real estate market" with what occurred in Japan just highlights the lack of understanding from so called critics who never let critical reason and the facts get in the way of their emotive diatribe on property.

kind Regards
non recourse

 

^^ Because it's different here?

 

Yes I remember :lol: back in 2011 he was part of the rat pack that sneered and jeered. I was checking out how much I have paid down my mortgages since I started on this site in 2011. Just like all the other 1.1 million Australians who have investment properties paying much more than the regular interest and principal repayments. Anyone who has significant savings in a bank account is beeing bent over and having it driven home.

Kind Regards
non recourse

 

Find that hard to believe. I didn't join up here till mid 2012.

 

Clone of banned auspm :lol:

Kind Regards
non recourse

 

So back to the topic at hand.

So according to you:

1. People holding their home deposit in the bank are screwed? (I think most SS members would agree with that)
2. Banks will create a separate (solvent) entity to continue enforcing mortgages?

Where does that leave real estate prices, jobs, and the Australian economy?

[youtube]http://www.youtube.com/watch?v=GdV4pr4frd4[/youtube]

 

Good question but you also need to ask what happens to people who are holding paper assets such as shares and bonds.

If all you have is paper equities I'd say your up the creek with no proverbial paddle

Provided you are a gold and silver stacker and you have hedged 5% of your net property worth before the crash with bullion and you continue to meet your mortgage repayments even though your property is worth less than you owe probably not much.

If you were even smarter and had 5% of your total net assets in bullion before the crash in an SMSF with a few properties that you hold outright title to then

The properties will eventually recover. In the scenario you are talking about most of the companies would fold.

Try borrowing a lot of money using shares as your equity guarantee.....

Kind Regards
non recourse

 

Depends on the shares you are talking about.

I don't see the Coca Colas, Walmarts and Halliburtons of the world going anywhere. Sure, prices may fluctuate, but I can't see any of them folding.