2020 Collapse

I think we are going to get what we get no matter what they call it or the what the official numbers show.
The formulas for every govt figure have been changed so many times over the years they can paint any picture they want, just like they are now.

You can only give so much credibility to any numbers given.
 
Michael Kay said:
But tomorrow it will be an "inflation's good" article. :p
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In the eyes and heads of CB monetary theorists inflation is a necessity. The only stories we'll ever see running tomorrow, or in 1 year or 10 years etc are that high inflation is bad, low inflation is bad and that a targeted inflation rate is good.

I agree about the credibility comment in the quote from the article.
 
Former ASX chairman Maurice Newman says Treasurer Jim Chalmers is promoting “his own sense of what values are important” in his essay.

“I think that what Dr Chalmers is putting out there is his own sense of what values are important, not necessarily what everybody else’s values think are important,” he told Sky News Business Editor Ross Greenwood.

“It’s quite clear that the methods that he is outlining to achieve those objectives have not been successful anywhere.

“So he’s proposing these things as if they are new, but it’s really just regurgitating and repackaging socialism or even fascism that we’ve seen fail everywhere else.”

https://www.skynews.com.au/opinion/...ifesto/video/8644d7752fdadc6fd523a0d7b5102270
 
Nevermind it was a meme that would probanly get me banned haha.

What happened to JOTD? It says i can't read or post there.
 
PM sent, if you've got a question either post it in the "Questions and Comments" sub-forum or send me a PM.
 
I've heard 2 other respected opinions, the first was that the low was in October 2022 which means we're in an expansion phase and the 2nd is to expect a soft-landing which puts us at the contraction stage and therefore little panic, capitulation, anger and depression.

It's fkn confusing with all the different opinions.
 
They've gone full Volcker. Just don't be too leveraged and you'll be ok in the short-to-medium term. My guess is as good anyone's. If anyone is a sage, then DM me +D
 
I'd like to hear more from the smartasses constantly saying they could never raise interest rates and 2% was a commonly cited point of collapse. BUT BUT BUT
 
Michael Kay said:
yeah, i just used the "Full Volcker" term very, very loosely.
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Yep, it's gone beyond "full Volcker" now.

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JPow lifted rates 19x what they were.

Volcker only about 1.5x larger and he fkd up in the process.

Michael Kay said:
They are nowhere near the double digits that it ought to be.
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Why double digits? The idea is to kill inflation, not humanity. There's not enough money in circulation in the real economy to be able to afford double digit rates.
 
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Based on the average size mortgage in Australia, raising the rate to 11% means that the average household has to earn $285660/annum to remain in the stress free zone. Earning $228 528/annum puts them into the danger zone and if they're earning less than $190000/annum then they're in the mortgage stress zone.

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The median weekly gross annual income of Australian households in 2020 was $92872. So that's not going to get you a house nor afford the rent if rates got to 11%. Our IP repayments are 50% more than they were a year ago, we bumped the rent up 18% for the next 12 month lease and we'll be still drawing on our incomes to meet expenses. Not in negative gearing territory but it's within our SMSF so there's other expenses we have to meet.

Double digit rates don't make good economic sense.
 
mmm....shiney! said:
Double digit rates don't make good economic sense.
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Don't put the cart before the horse.

It's not the rates that's the issue, it's the asset bubbles, especially housing (but that is only one of the bubbles). Much like Icarus, the great Aussie housing bubble has flown for way too high, for way too long. And we don't have fixed rate for life mortgages like yanks do.

If it gets too bad your tenants will move in with relatives or live in their car, how will you service the loan then? Overpriced residential housing also makes people reluctant to reproduce, and this is demographic timebomb, esp in nations like China/JP, that have very little immigration.

In 2007, houses were about 4x average incomes and 7% was serviceable, now it's (what is it? 8x incomes?). That is the problem. We've learned nothing from the subprime crisis. Commercial real estate is also at a crossroads https://www.bloomberg.com/news/feat...te-is-sitting-on-a-175-billion-debt-time-bomb
 
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Modern economies are dependent upon credit expansion for growth. Demographics no longer play a part and technology is largely having incremental effects rather than the mass disruptions of the past.

Therefore interest rates are the issue because the higher they are the more impact they'll have on growth.

As far as my IP goes well I guess if it gets too bad we'll have to move in with the rellies or live out of the car. But that won't be a problem because we'll have the double-digit interest rates we should have and they're not really an issue anyway. o_O

We've leant a lot from the sub-prime mortgage crisis and banks are now forced to hold HQLA on their balance sheets in order to avoid failure. We've also learned from that that bursting asset prices actually lead to economic disaster rather than increased prosperity for all.

Housing prices have skipped ahead of incomes for more reasons than just low rates.
 
In 2018 i thought my 3% mortgage was a little high haha.
I would just be waiting for it all to come down at this point, at least asking prices. You could always refinance later.
 
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