Comments on: Debt Backed Securities Face Deepening Trouble

By: Debt Backed Securities Face Deepening Trouble

Debt Backed Securities Face Deepening Trouble — Mon, 03 Nov 2008 15:33:08 +0000

[...] Debt Backed Securities Face Deepening Trouble addthis_url = [...]

By: kayle

kayle — Wed, 20 Aug 2008 04:38:09 +0000

(edit...I mean, "into our bank account than get fleeced by some bankster trying to make their CEO bonus" &c.)

By: kayle

kayle — Wed, 20 Aug 2008 04:35:50 +0000

@crisco Agree with 90% of your post, but calling BS on the wisdom (koff) of the Boomers. They're the problem, more like. (Gen Y, in their 20s, are hardly the ones who drove up house prices and speculated wildly in the hope of making a retirement income...) My in-laws have decided to sell their post-WWII teardown on an unremarkable lot for nearly half-a-million bux. House is in terrible shape, 3 bed 1 bath, structurally unsound (some of the doors won't even close anymore from shifting), suspected asbestos in the basement. Lot is 1/3 acre, in a boring suburb (Ermington), with no close access to transit (but a bus stop at a brisk walk from their place). My MIL told me she'd had an offer of $400K but "wouldn't even consider it, of course". These wanna-be Trumps paid something like $30G back in the 70s for their house, and IF they can find a Greater Fool to overpay that much for their teardown, they still can't pocket the windfall because they've turned around and committed the same amount on some small villa in an equally boring, inaccessible suburb that's "great for retirees". (Hopefully ones who can drive a lot or don't need to go anywhere.) You see the problem. Stupidity comes in all generations, and because the Boomers were so big, consequently they have more stupids in theirs...who are out in force, hoping to get the X's and Y's to fund their retirements by taking over their POS boxes of air. If we listened to the "wisdom" of my Boomer in-laws, we'd have a half-million-dollar debt around our necks right now and be praying to Sweet Jeebus that our kids were dumb enough to bail us out of it when they're old enough to work. (And yes, they DID advise us to "buy a house" because then we'd be "putting our money into an asset". HA...I told them I'd rather put it in the bank than get fleeced by some bank trying to make their CEO bonus in fees and interest.)

By: Crisco

Crisco — Tue, 19 Aug 2008 03:47:16 +0000

Come on guys! It's not the Reserve Bank causing the problem. That's a Y generation cop out! Householders in Australia went for broke in the borrowing game to keep up with Mr & Mrs Jones in the housing and Blu-Ray/Plasma stakes.
It was overborrowing on the maximum sized house for their dollar, the car and the toys for the kiddies without recourse to risk in the credit market.
First law of business: Money costs money! Someone must pay! Interest rates had to rise because that's the nature of markets. It isn't any different to Fast Eddie of ABC learning who took margin loans on spec stocks. Big trouble for Eddy, big trouble for Australia if the RBA didn't turn off the caffeine drip.
The Y generation is lucky there are enough baby boomers still running the economy who still remember the hard times when money wasn't so plentiful. You should have listened to your parents.

By: rahul

rahul — Mon, 18 Aug 2008 12:25:26 +0000

Totally agree with Fast Ben. The RBA, like most other central banks, likes to believe it is the pickup in real demand (and not asset bubbles fuelled by easy credit) that causes inflation, and is now prepared to ease at the very hint of a slowdown in credit growth - which is believed to be "vital to economic growth"
Ulimately, it is the banks being rescued from their shrinking margins and falling volumes (brought about by bad business decisions in the first place)

By: justin

justin — Mon, 18 Aug 2008 01:09:02 +0000

Watch the 90 day bank bill rate, that will tell you which way the RBA turns. Interestingly it has dropped significantly in the last week or two after being quite a bit higher for months and months.

Interestingly the AUD has also dropped significantly in the last week or two.

By: GaryB

GaryB — Mon, 18 Aug 2008 00:48:44 +0000

Exactly right Fast Ben, the RBA would be foolish to throw in the towel on the fight against roaring inflation. Aust needs more savers, not speculators profiteering from real estate and pushing up house prices for owner-occupiers. In the Sunday Mail yesterday Noel Whitaker was geeing up the real estate speculators and another story was salivating over the glories of negative gearing - stomach turning stuff for the young aspiring fist home owner-occupier. Anyway, the tax cuts from 1 July and oil prices easing from mid-July have probably delivered the equivalent of an 0.5% cut in rates for mortgage holders.

By: justin

justin — Sun, 17 Aug 2008 11:11:21 +0000

The Reserve Bankers are a bunch of idiots, beat only by the politicians. Not low, or high interest rates are needed, but stable interest rates and stable exchange rates. The Reserve Bank and its fiat money has achieved neither.

By: Fast Ben

Fast Ben — Sun, 17 Aug 2008 06:43:56 +0000

The Reserve Bank keeps a close eye on their rigged CPI figures but has completely ignored Asset Inflation. Now at the first whiff of smoke they raise the white flag against the inflation fight. Higher interest rates are the only way to increase Australian’s savings and bring back housing affordability.

By: Ross

Ross — Fri, 15 Aug 2008 06:54:33 +0000

From 1969-82 the AU wages share went deep into paying off fixed rate mortgages set pre-inflation in a 3rd of the time. This grew the real estate bubble culture (get in deepest the banks ill let you early and wait for inflation) and taught the banks how "not to do it" Aussie style (hence not fixed but variable). With the US being mainly 30yr fixed and non recourse they didn't get the same greasy path but with crooked regulators and wall street blow-ins as treasury secretaries they didn't really need to as they could get plenty with Greenspan's puts running the cycle out.