tag:blogger.com,1999:blog-9214368411532770626.post3189970427090685825..comments2015-04-20T15:12:32.820+10:00Comments on The Great Australian Investment Ponzi: Property valuation and the bubble economyDr Benwayhttp://www.blogger.com/profile/07733149271772819325noreply@blogger.comBlogger10125tag:blogger.com,1999:blog-9214368411532770626.post-48309344927589192212015-03-29T15:52:31.961+11:002015-03-29T15:52:31.961+11:00Your comment is spot on, Rachael, that is an excel...Your comment is spot on, Rachael, that is an excellent summary of the situation. But like Gavin points out, the bubble is global (albeit the most ridiculous here in Australia). There is nowhere to go.<br /><br />Bubbleblowing has not just hurt the economy, it has <em>become</em> the economy, to the detriment of any and all actually productive enterprise. So even if the politicians wanted to stop the bubble, they wouldn't dare, it would be their end. This explains the recent bleatings from the RBA, and their sage "warnings" about "risks" in the "market". They are preemptively trying to deflect responsibility for what they have done.Dr Benwayhttps://www.blogger.com/profile/07733149271772819325noreply@blogger.comtag:blogger.com,1999:blog-9214368411532770626.post-53036681708515989832015-03-29T13:50:02.698+11:002015-03-29T13:50:02.698+11:00Rachael, I'm with you on this and I think I...Rachael, I'm with you on this and I think I've seen you comment on other blogs about this before. I've seen this all before (when I lived in Europe for a short while), it's a shame that young Australian's are being screwed to pay for the retirement of older generations.<br /><br />I have thought about leaving again, but not sure where I'd go that isn't also experiencing a crazy bubble. Cape Town comes to mind but has it's own problems.Gavin Doolanhttps://www.blogger.com/profile/08516762430079151848noreply@blogger.comtag:blogger.com,1999:blog-9214368411532770626.post-55232787889063165492015-03-29T12:16:24.414+11:002015-03-29T12:16:24.414+11:00They could fix this, they could simply -
Release ...They could fix this, they could simply - <br />Release more land. <br />Scrap NG and CGT concessions. <br />Scrap SMSFs buying IPs. <br />Enforce FIRB laws. <br />There are lots of ways to solve this problem...but THEY DON'T WANT TO! <br />Our politicians personally own about three investment properties each!<br />They answer to a baby-boomer electorate that couldn't give a stuff about the generations to come. They simply want younger Australians to pay for their retirements with rent.<br />Given the opportunity, they'll take even more... maybe the kids should sacrifice their superannuation to the property bubble! <br />Liberal, Labor, RBA, APRA... none of these abbreviations actually mean anything. <br />They're all in it together. <br />This is not a 'problem' they are failing to solve, it's their design.<br />If you're young and you're holding an Australian passport, LEAVE.<br />The current system is designed to suck all of the blood from your system to feed the elderly.<br />Leave, and don't come back till it collapses.Anonymoushttps://www.blogger.com/profile/09185243942342937041noreply@blogger.comtag:blogger.com,1999:blog-9214368411532770626.post-17939512260344948122015-03-22T18:06:28.794+11:002015-03-22T18:06:28.794+11:00Good points, dancitron. A plethora of ways to skin...Good points, dancitron. A plethora of ways to skin an economy and fleece the unborn, a multitude of recipes for eating the seedcorn.Dr Benwayhttps://www.blogger.com/profile/07733149271772819325noreply@blogger.comtag:blogger.com,1999:blog-9214368411532770626.post-281209944229761002015-03-22T18:02:13.905+11:002015-03-22T18:02:13.905+11:00Thanks for sharing this, TheForms. Long-term pain ...Thanks for sharing this, TheForms. Long-term pain indeed. Our entire economic system now relies on using debt to inflate asset prices at a higher rate than underlying cash flows. To abandon the bubble economy would necessitate a complete rethink of our society, not to mention collapsing property prices, stock prices, pension plans. Hundreds of thousands of people employed by banks/financials would have to find actually productive jobs that simply no longer exist in Australia. People would find they own but a fraction of the wealth they thought they did, and millions would be entirely wiped out.Dr Benwayhttps://www.blogger.com/profile/07733149271772819325noreply@blogger.comtag:blogger.com,1999:blog-9214368411532770626.post-63866464374000372082015-03-22T13:39:02.869+11:002015-03-22T13:39:02.869+11:00Came across this today, nothing new I guess, just ...Came across this today, nothing new I guess, just thought I’d mention it:<br /><br />‘Surry Hills wreck soars over reserve’<br /><br />http://news.domain.com.au/domain/real-estate-news/surry-hills-wreck-soars-over-reserve-20150321-1m4jzl.html<br /><br />I particularly like the quote: "It's a rising market and this will be for long-term gain…”<br /><br />My market bet is on long-term pain; soon enough. <br />TheFormshttps://www.blogger.com/profile/02620517198013194462noreply@blogger.comtag:blogger.com,1999:blog-9214368411532770626.post-39890027679225123212015-03-05T13:51:53.688+11:002015-03-05T13:51:53.688+11:00Good article. However, like most analysis of the ...Good article. However, like most analysis of the Australian housing bubble you forget to mention arguably the single biggest factor behind unsustainable price growth - welfare police.<br /><br />There are about 2.5 million Australians receiving the full (or partial) Age Pension of which 2.26 million (90%) are home owners. A couple can enjoy the full Age Pension if they have assets under $286,500 and a partial pension up to $1,145,000 EXCLUDING the value of the family home. The full Age Pension for a couple if $33,500 a year without factoring in the PBS benefits, discounted rates and utilities, discounted car registration and so on.<br /><br />The bottom line? The political-majority (stealing generation) is enormously incentivized to remain in the houses on quarter-acre blocks they bought 20/30/40/50 years ago for < 3x annual income. They have no reason to sell up and downsize to release equity to generate income or reverse mortgage their homes. Do not underestimate the effect this has on supply availability and prices.dancitronhttps://www.blogger.com/profile/10260742498714574543noreply@blogger.comtag:blogger.com,1999:blog-9214368411532770626.post-27553911742785232712015-02-17T14:05:39.418+11:002015-02-17T14:05:39.418+11:00I don’t know the likelihood of a crash,
But it’s ...I don’t know the likelihood of a crash,<br /><br />But it’s absurd to think that the simple act of wanting to buy a family home has now seemingly turned into one of the most risky gambles one can make.<br /><br />Especially, if one is leveraged up to the gills. TheFormshttps://www.blogger.com/profile/02620517198013194462noreply@blogger.comtag:blogger.com,1999:blog-9214368411532770626.post-6738845365891508472015-02-16T22:07:20.767+11:002015-02-16T22:07:20.767+11:00Yeah I agree. The dourfaced bubblehead of the RBA ...Yeah I agree. The dourfaced bubblehead of the RBA will shamelessly go to any length to maintain the bubbles, including destroying the prospects of future generations. It's all the west makes these days; debt-fuelled asset bubbles. I'm not so optimistic as to envision a crash though, but rather a long slog in the form of decades or centuries of slowly declining average real income and living standards. It's already happening.Dr Benwayhttps://www.blogger.com/profile/07733149271772819325noreply@blogger.comtag:blogger.com,1999:blog-9214368411532770626.post-19117118814037027232015-02-16T10:28:44.698+11:002015-02-16T10:28:44.698+11:00Nice diagnosis of the problem Dr.
Yes, the prescr...Nice diagnosis of the problem Dr.<br /><br />Yes, the prescription is a house price crash, long overdue, but seems as far off as ever, even with the insane rate of change in Sydney prices.<br /> <br />I see at 3.2 ‘Imposing Losses on Creditors’ the nice folk at the RBA are preparing for one however:<br /><br />http://www.rba.gov.au/publications/submissions/fin-sys-inquiry-201408/crisis-management-resolution.html<br /><br />They have their sights on depositor’s money it seems!<br /><br />I’m sure they must get a warm and fuzzy feeling being able to force others to pay for their banking buddies mistakes. <br />TheFormshttps://www.blogger.com/profile/02620517198013194462noreply@blogger.com