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Economic outlook – look out (take 2)

Double dippers are on the rise.

Nouriel Roubini: “Risk of a double dip recession in advanced economies (US, Japan, Eurozone) has now risen to 40%.”

Robert Schiller: “… also said last week that there’s a greater than a 50 percent chance of falling into another downturn.”

San Francisco Fed: “put the odds of a second recession in the next 10 months at “no greater than a coin toss.”

Mohamed El-Erian (PIMCO): “… said earlier this month that the U.S. faces a 25 percent chance of a double dip and deflation.”

David Rosenberg: “higher than 50-50,” and “If You Don’t Believe In A Double Dip, It’s Because The First Recession Never Ended”.

Thursday and Friday began with the markets’ reaction to data concurring with the double dippers.

It’s the mainstream, stupid

Poor Mr. Hoenig is the lone dissenter at the Fed. The New York Times tugs at the rug under his feet, not realising he stands on a bedrock of logic:

“I wish free money was really free and that there was a painless way to move from severe recession and high leverage to robust and sustainable economic growth, but there is no shortcut.”

While Mr. Hoenig’s view is far from the mainstream …

Poor guy. Opposing the Chairman of the Federal Reserve means anything you say is no longer mainstream. Even if it is blatantly obvious and true, it’s not mainstream, so it’s wrong. Hoenig continues with more comments, which are not only self evident, but vindicated by the recent financial crisis:

“Monetary policy is a useful tool, but it cannot solve every problem faced by the United States,” Mr. Hoenig told local Chamber of Commerce members in a speech at the University of Nebraska, Lincoln. “In trying to use policy as a cure-all, we will repeat the cycle of severe recession and unemployment in a few short years by keeping rates too low for too long.”

“In judging how we approach this recovery, it seems to me that we need to be careful not to repeat those policy patterns that followed the recessions of 1990-91 and 2001,” Mr. Hoenig said. “If we again leave rates too low, too long, out of our uneasiness over the strength of the recovery and our intense desire to avoid recession at all costs, we are risking a repeat of past errors and the consequences they bring.”

Remember though, he’s not mainstream, so ignore him. (Why are you reading this?)

It’s pretty rare for a central banker to forecast boom, doom and gloom. It’s also rare for central bankers to accurately and concisely point out the causes of financial crises. But whether the phrase “too low for too long” will ever make it into mainstream economics textbooks is unlikely.

If you want to find out just how competent the mainstream is, this is one of the best articles around.

Our favourite central banker

Perhaps the rarest of all central banking achievements is to forecast, pinpoint the causes of and make provisions for an incoming financial disaster, all in a timely manner. Who you ask? Glenn Stevens? Nope. Ben Bernanke? Nope. Maestro Greenspan? Certainly not. Not even the mentor of all of the above, Zimbabwe’s Gideon Gono, saw the crisis coming. But one central banker did.

Governor Riad Salameh, of Lebanon!

“… in 2007 [Riad] ordered the country’s private banks to exit all mortgage-backed securities and brace for the financial crash he saw looming.”You could have thought [he] had a crystal ball,” said Edward Gardner of the International Monetary Fund (IMF) regarding Salameh’s actions.”

Never again shall it be said that nobody saw the crisis coming. Even a central banker saw it coming.

We won’t go into the IMF’s track record again. Instead, check out this link, which features more than 20 articles by Austrian economists predicting the crisis, or various elements of it. Riad doesn’t belong to the Austrian school. No central banker does. And we don’t endorse Riad. He is simply the only competent forecaster when it comes to central bankers. That is of concern considering their responsibilities.

(Dan points out that financial crisis guru Nassim Taleb is also from Lebanon.)

Keynes needs a bailout

The most delightfully ironic news comes, as always, from the bailout and stimulus arena. Now remember that the idea of stimulus is to stimulate demand, which then has a multiplier effect. The idea of a bailout is to avoid a similar implosion from a reversed multiplier effect. At least that was the Keynesian idea.

But once again Keynesians have come up short. That’s not a surprise for those possessing some logic.

David Stockman, President Regan’s Budget Director, points out how well stimulus has performed in the land of stimulus itself:

“Nominal GDP is only $100 billion higher than it was back in the third quarter of 2008. That means it has been growing at only $4 billion per month, while new federal debt has been accumulating at around $100 billion per month.

“Yes, this period represents the worst of the so-called Great Recession, but never in history has the federal debt grown at a rate of 25 times GDP for two years running!”

What is surprising is that even the stimulus applied directly by the state doesn’t stimulate, let alone have a multiplier effect.

US state governments, despite their pathetic budget management of the past years, have had a financial epiphany on the matter. They have decided to use much of the $26 billion handed to them by the federal government by not using it… yet. Why?

“We’re a little wary about hiring people if we only have money for a year,” Clark County Las Vegas CFO Jeff Weiler said in The New York Times.

So it takes a government CFO to figure out the flaws of stimulus. A once off injection will withdraw any stimulus effect it had as soon as it ends. Which is why they tend not to end, or, when administered by people who have figured this out, there is no initial stimulus in the first place.

Agora’s 5 Minute Forecast elaborates:

“But haven’t we been through this already? Recall 2008, when a $160 billion stimulus gave every middle-class American a check for $300… and what did they do with it? A few months later, banks get $700 billion… and didn’t lend a penny of it. GM got $57 billion, then went bankrupt. AIG… we don’t even keep track anymore.”

So not only is the intention of stimulus flawed, but its execution doesn’t work either.

The terminator has taken all this rather badly. 150,000 Californian workers have been furloughed by the other kind of Austrian. That means taking a compulsory holiday without pay. So working for the government no longer means job security. Another lesson learned the hard way.

The cost of costing

The costing debate rages on. The only conclusion drawable is that both sides are chronic hypocrites. And it’s not like costing estimates are remotely accurate:

Public Transport Minister Martin “Pakula has admitted in a statement to Parliament that the average expected cost of stations the government promised in 2006 at Lynbrook, Williams Landing and Cardinia Road in Pakenham had almost tripled.”

On the national level, one comment does stand out. The much publicised efforts of the parties to pay off the debt have lead to some concerning guarantees for Keynesians. Gillard says she will not budge on returning to surplus by 2013. She won’t even answer hypotheticals on the issue. So, we take it that the onset of another economic crisis will leave the Australian stimulus story dead in the water.

If Julia could be trusted to stand fast, we might even vote Labor. The Australian tells us to do a donkey vote after doing its questionnaire. Strangely enough, the Greens and the Liberals tied in terms of matching you editor’s preferences. That would suggest your editor is an Ass more than a Donkey.

Abbott bonding with the taxpayer

“The Opposition has unveiled a scheme to fund infrastructure development through bonds rather than through government borrowing.”

In Australian academic speak, “bonds” are government borrowing. (Private bonds are referred to as debentures.)

Could someone explain this whole thing please? Here are 1, 2, 3 articles on the topic. None seem to say anywhere how those bonds will be repaid. It just mentions a tax benefit on holding the bonds. Will the completed infrastructure projects charge people, or will the government pay off the bonds through tax revenue? Either way, it seems Tony may have pulled off quite a hoax.

Regardless, long term Daily Reckoning and Money Morning readers will recall Dan and Kris’ warnings about the government’s upcoming efforts to tap the super industry’s funds. Well, this bonds thing is another development:

“The key is the tax benefit, which doesn’t have to be large and would make them very attractive to superannuation funds.”

One step closer to having super funds funding government projects.

Is long term investing dead?

“High priests of investing have always held one tenet above all. That tenet was to invest for the long term, through the thick and thin of business cycles to emerge wealthier at the other end. Not anymore.”

Apparently, fund managers seeking “alpha” (returns above the broader market’s performance) are now in fashion. Here at Port Phillip Publishing, we wouldn’t know if there is anything to this new idea. It’s not like it has been our business model from the beginning… (being fashionable).

Even the super funds are catching on. But the amusing thing is that managed funds will of course incur higher fees (all else equal). And they can’t all beat the market. So will greed defeat Aussie egalitarianism? Only one of the two is common sense when it comes to making money. At least based on the past few years of range bound markets.

But if the bottom falls out of this basic concept of investing, what will financial advisers tell their clients? After years of claiming stock pickers are jerks, there seems little else to fill the void.

One thing they won’t mention is something Michael Evans at The Age has pointed out:

“… a report found nearly half of the money raised in the aftermath of the financial crisis did not give existing shareholders the chance to take part.

“A review of the near $100 billion in capital injections made in 2008-09 questioned the fairness and transparency of the process, finding existing shareholders suffered an extraordinary transfer of wealth to other investors picked by company management and their investment bank advisers.”

“Extraordinary wealth transfer”. If you are a blind buy and hold investor, someone is laughing at your expense.

Deutschland ueber alles

The Germans are making themselves unpopular with their stellar economic growth:

“The German economy ministry has pencilled in around 3.0 per cent growth this year, more than double the previous estimate, following the strong expansion seen in the second quarter, reports said on Sunday. Der Spiegel weekly and the Welt am Sonntag said that unlike in the past, growth in Europe’s biggest economy was being driven by domestic demand and not just by exports, making it more resilient to weaker conditions elsewhere. Preliminary data from the statistics office on Friday showed that German gross domestic product (GDP) grew 2.2 per cent quarter-on-quarter in the period April to June, the fastest expansion since reunification in 1990.”

A reader sent us an article about debt levels, which pointed out that Germany isn’t exactly debt free. But what people tend to forget is that debt can be a very good thing, if it is invested in assets that provide a return. Germany’s export success requires this kind of debt. American consumption levels required a different kind. Guess where Aussies sit…

Burn and churn baby

The outrage over banking profits has exposed another hypocrisy in the Aussie property mania psyche.

“According to the REIV, as of last week, 18,294 properties had been put up for auction in 2010 – the highest number recorded for that period of the year. The year-to-date clearance rate is 76 per cent, with real estate transactions worth a record $18.8 billion, $5.3 billion more than at this time in 2009. This week there were 535 reported auctions and a clearance rate of 68 per cent.”

Who makes money on all this? Banks and lawyers do. And plenty of it. (We can vouch that many of both do so in dangerously incompetent fashion).

The editor of our sister publication Money Morning wrote a fantastic article on the state of the property industry on Wednesday.

We can’t remember where we read or heard it, but the following point struck a chord:

Rising house prices don’t benefit Australia. They are merely a transfer of wealth from the property buyers to the property sellers. And yet, rising prices are one of Australia’s most celebrated news items.

Until next week,

Nickolai Hubble.
The Daily Reckoning Week in Review

83 Comments

  1. AnnoyingOrange says:

    It seems more likely now that something big could happen.

    The question is what to do? That would make a good article. Buy gold? I think the dip will be so big that all prices fall.

    We are told Australia’s economy is strong, but I don’t see it. Our real estate price bubble will be our downfall here. If real estate collapses the whole house of cards goes with it.

    Our reliance on ore sales is also a weak spot.

    The international tourist market has already been smashed, just look at Cairns.

  2. peterg says:

    rising house prices make ‘mainstream’ Ozzies feel like successful aspirants and keep them content and consumptive (sic). this gives the country political stability (well, I post this on the morning after the election results, so well see about that wont we?), investor (mining) confidence and suppportive of anti-socialist policies (not calling o much for higher wages through productivity improvements or wealth distribution to get ahead). In the event of socialist policies, then supportive of those policies that drive wealth from the bottom to the top (middle class welfare). ’cause we’re all (well, almost all) rich in real estate and happy little vegemites. – except for Dick Smith :-)
    also locks happy workers into long term mortgages so that they pay more to work more (higher prices in places where theres jobs, which is surely a cost of production outsourced to the worker).

  3. nv says:

    “I think the dip will be so big that all prices fall.”

    Great, I will now become a property debtor and negative gear on a property with the added bonus of my debt/property gearing negatively. Wow! Double dip bonus for moi.

    “The international tourist market has already been smashed, just look at Cairns.”

    Rubbish son, ask bi_ker peat who only just returned from the far north of QLD where he encountered not a single mozzie and had to book three (3) days in advance to munch on……

    “Enjoyed the Thai Chicken Spring Rolls with Banana Mayo and Asian Greens”
    mmmm , well here’s your “Thai Chicken Spring Rolls”……. http://www.youtube.com/watch?v=2PzSxavGiWQ

    ….and your “Banana Mayo”…. http://www.youtube.com/watch?v=fnvUQ0nQCjM&feature=related

  4. nv says:

    “I think the dip will be so big that all prices fall.”

    Great, I will now become a property debtor and negative gear on a property with the added bonus of my debt/property gearing negatively. Wow! Double dip bonus for moi.

    “The international tourist market has already been smashed, just look at Cairns.”

    Rubbish son, ask bi_ker peat who only just returned from the far north of QLD where he encountered not a single mozzie and had to book three (3) days in advance to munch on……

  5. nv says:

    “Enjoyed the Thai Chicken Spring Rolls with Banana Mayo and Asian Greens”

    mmmm , well here’s your “Thai Chicken Spring Rolls”……. http://www.youtube.com/watch?v=2PzSxavGiWQ

  6. Biker says:

    Had a great time in Far Northern QLD, NV. How long since you were up there? You’re correct: we never saw one mosquito in Cairns or Port Douglas, or any of the other FNQ towns we visited during day trips.

    Haven’t bothered clicking your links. I imagine they’re more of the doomngloom you thrive on, son. Maybe your next trip should be to China.
    Apparently they milk bears for their bile. ;)

  7. Ned S says:

    I’m not overly enamoured with Oz property investment right now either NV. But seeing I don’t have any great personal use for a heap of bullion, and that stocks and bonds are obviously open invitations to the big financials to pinch one’s money, and that government desperately desires to trash the value of our cash, Oz housing still seems to be about the only game in town? For me. But yep, I agree, I wouldn’t want to play the game on too much leverage. And as your personal circumstances are almost certainly different to mine, then in lots of ways we need to play different games to attempt to cater to our different needs over different timeframes I guess.

  8. Ned S says:

    Been reading some more about the boss bubblepedia bloke Biker – He’s an anaesthetist. I can only assume the poor begger is struggling to make ends meet given the lack of demand for his services from busted arsed old boomers in Sydney these days. So sad; I get all teary eyed over the sad stories of poverty and deprivation I hear from Aussies these days … :( :)

  9. Stillgotshoeson says:

    Comment by Ned S on 23 August 2010:

    I agree, I wouldn’t want to play the game on too much leverage. And as your personal circumstances are almost certainly different to mine, then in lots of ways we need to play different games to attempt to cater to our different needs over different timeframes I guess.

    That is the problem though Ned.. A lot of people have bought “500k” property with 400K plus mortgages and are going to find themselves paying 8,9,10+% non deductible interest on their homes, homes that at best over the next few years have no capital growth or at worse decline by 20,30 or 40+%. If one has bought a house to live in for the next 25+ years, they would probably (and should) care less what the value does in the SHORT TERM to MEDIUM TERM..however if one has bought it with the intention of making above average returns over the short to medium term then a wake up call you are about to receive.

  10. Biker says:

    “…then a wake up call you are about to receive….”

    Getting into the third year of hearing that it’s ‘about’ to happen, Shoes. ;)

    “…decline by 20,30 or 40+%…”

    I think you might be a little surprised what 2011 and 2012 deliver to your Christmas stocking, but good luck, anyway.

    I wouldn’t be buying where you (don’t) want to, anyway!~ :D

  11. Ned S says:

    Agreed Shoes – I wouldn’t feel personally inclined to buy in the particular hope of real capital gain these days. (I just like getting the rent – And the suspicion that it’s way more steady than what the RBA might dish out on cash.) But the system is rigged against you mate – Even in a stagflationary period nominal house prices are likely to go up; While you get to pay 25%(?) CGT on any profit you might make on other asset classes before you can move it to property. Assuming one does want to move it to property. And while you mightn’t, I would! :)

  12. Ned S says:

    “you get to pay 25%(?) CGT on any profit you might make on other asset classes before you can move it to property” – And if property has been going up as well Shoes (even only nominally), you get stiffed both ends! :)

  13. Biker says:

    “…on any profit you _might_ make on other asset classes…”

    And _might_ is the operative word here, Ned. :D

  14. Stillgotshoeson says:

    Comment by Biker on 23 August 2010:

    “…on any profit you _might_ make on other asset classes…”

    And _might_ is the operative word here, Ned. :D

    I have out performed the property market over the last 7 years in the “property boom times” feel fairly confident I will continue to do so.. even allowing for the CGT.

  15. Biker says:

    “I have out performed the property market over the last 7 years”

    Probably on _paper_ in your Share Market Game, son.
    Doubt you’ve actually _done anything_ whatsoever. :D

  16. Ned S says:

    Stagflation is a tough world for an investor Biker – Inflation, a no brainer! Deflation, another no brainer! Damn that old Oriental blessing cum curse I reckon! :)

  17. Stillgotshoeson says:

    Comment by Biker on 23 August 2010:

    “I have out performed the property market over the last 7 years”

    Probably on _paper_ in your Share Market Game, son.
    Doubt you’ve actually _done anything_ whatsoever. :D

    Your entitled to your opinions.. even if they are wrong ;)

  18. Stillgotshoeson says:

    You’re even

  19. Davo says:

    Gotta love those real estate doom and gloom merchants.
    Well, I’ve been watching a 809sq m block that was split in 2 to see how long it took to sell in my suburb. Listed initially for offers over $899K for the 2 and they took about 6 weeks to sell. I’ve not seen 2 blocks in a crappier location for a long time. It would be positively life threatening to reverse out of one of the blocks, for several reasons, you would be reversing onto a very busy road here in Brisbane into the middle of an intersection, after negotiating your way around the traffic light post that would be positioned in the middle of your driveway, and having traffic and pedestrians coming at you from 3 directions. If you are curious, go onto google maps and have a look at 257 Junction Road, Clayfield.
    Somebody has paid as much for one of these blocks as you could expect to pay for a good quality 4 bed, 2 bath house further out from the CBD.
    Is that a good buy? I wouldn’t have thought so, but every seller needs just 1 buyer. These blocks are admittedly 100 metres from a railway station where you have a choice of trains from 4 lines, 10 minutes to CBD (outside peak hour), 10 minutes to both airports (unless the roadworks catch you)and shopping, restaurants all very close by.

    The thing that people forget is the supply and demand factor for land close to the city. You have a choice, pay $600K for a crappy old house that you hope you can renovate or detonate, or pay $450K for probably the only vacant block available, and build your $400K house on it. How do prices drop 40% in that scenario, with unemployment at 5.3%, interest rates at average levels and a general feeling that life isn’t so bad for some.

    Hey Biker, did you get out to Undara Lava Tube on your FNQ jaunt?

  20. Biker says:

    Not quite. I’ve been running your figures.

    You’ve got off _lightly_ so far.

    Why not _push_ your luck?!~ :D

  21. Stillgotshoeson says:

    Comment by Ned S on 23 August 2010:

    Even in a stagflationary period nominal house prices are likely to go up;

    More likely too happen will be nominal prices (Melbourne and Sydney) will decline to a more normal level of 5 to 6 times average wages instead of the 8 or 9 they are now.. be this through no capital gain and wage increases to bring it down or a real decline in prices or a combination of both (my guess for most likely) gains for home buyers are more likely to be in the negative over the next few years.

    Share market is going to cop a hammering as well…

  22. Stillgotshoeson says:

    Comment by Biker on 23 August 2010:

    Not quite. I’ve been running your figures.

    You’ve got off _lightly_ so far.

    Why not _push_ your luck?!~ :D

    Figures that don’t include savings (that I would not have if I had a mortgage), interest and dividends and my super that I have salary sacrificed into.
    Based on what the marital home WAS worth to what it IS worth I am way in front
    I invest in more than 1 asset class.. Had I a mortgage I would have been paying that off and putting nil extra in other investments.. doing what I have done puts me so far in front it is not in my financial interest to purchase a house.

  23. Stillgotshoeson says:

    just went to look at the nytimes website and saw this… how fitting

    Housing Fades as a Means to Build Wealth, Analysts Say

    http://www.nytimes.com/2010/08/23/business/economy/23decline.html?_r=1&hp

  24. Ned S says:

    Got to bring in more migrants with lots of skills/money/money making capacity then Shoes – Only thing for it I’m afraid me ole bean! :) (And No, I’m NOT actually joking this time.)

  25. Biker says:

    “…doing what I have done puts me so far in front…”

    I figure you kissed the Blarney Stone, son.

    And now you’re over-compensating for it: Yap, yap, yap.

    I wouldn’t worry too much about Shoes paying any CGT, Ned. ;)

  26. Ned S says:

    Nah, I figure PH isn’t the only lad in Oz who figures he knows how to minimize his tax liability Biker … :)

  27. Biker says:

    Reading DR (US) this morning, I couldn’t help but reflect on the likelihood of massive emigration from the US, if Bonner & Co are correct. It will probably rival the mass emigration of the Potato Famine the other way in the mid-1850s… except we’ll probably experience pressure from Yanks fleeing their home shores, south to the Antipodes.

    Unable to service the most basic needs of its citizens, America may lose much of its middle class… and we’ll have to face not the Boat People, but the Airbus People, as they flee to higher wages and a better standard of living.

    That’s technology for you… . ;)

  28. Biker says:

    Davo: “…did you get out to Undara Lava Tube on your FNQ jaunt?”

    Ran out of time, Davo. We’ll go back!

    On the mozzie issue, it’s a little amusing that good friends headed off to Bali for the same fortnight we were in FNQ… and came back with dengue fever! Neither the missus nor I saw even one mosquito… although we have a corner of our own home property where the frogs and bats feast on them.

    Haven’t biked much further north than Sydney, so there’s a further trip planned. Haven’t been to Tassie yet, either… . Recently had to convince the better half that two years riding around Oz is just a _little_ too long. :D

  29. Bearamundi says:

    How do prices drop 40% in that scenario, with unemployment at 5.3%, interest rates at average levels and a general feeling that life isn’t so bad for some.

    Watch and learn davo, watch and learn :)

  30. Biker Pete says:

    We’ve been watching nearly three years now, Bear.
    (Aren’t you _learning_?!~ ;) )

  31. Davo says:

    If prices were to drop by 40% on average, that would imply that some areas would drop by much more and some by much less. The drop wouldn’t be uniform.
    The old axiom of location, location and location would then come into play, you would think.
    So, a property in a well located area would maybe drop by around 20%, which wouldn’t exactly be Armageddon.
    There is no doubt that some areas are dropping at the moment here. My old stomping ground has shown an increase in properties for sale in the $300,000’s, something not so evident a year ago.
    If this drop occurs, you’ll see an even more marked difference between properties within the 10km circle and those further out.

  32. Bearamundi says:

    I still think prices have to fall at these “levels” ( this cliche really annoys me). Even $300,000 is a lot of money for a house, davo. Houses are selling like hotcakes in Newcastle at these elevated _levels_ so there goes my theory Biker :D
    Thank God for Homer Simpson, now there is a slow(er) learner…
    davo, did you get some USD while the going was good? Still think the AUD/USD will improve for you, but it must be a nervous game for you ATM…

  33. Biker says:

    “Even $300,000 is a lot of money for a house, davo.”

    This, from a fella who:

    a. Weeps every time he makes his mortgage repayment

    b. Paid $30K for a secondhand stereo system.
    (Wife describes the sound as ‘good’! :D )

    “Thank God for Homer Simpson, now there is a slow(er) learner…”

    You said, it, chum(p)!~ ;)

  34. Davo says:

    Hi Bear,
    Haven’t purchased any cash yet. I’ll wait a bit longer. Read a research note yesterday from a stock broker “predicting” rate of 93c by year end.
    Hope that’s true.
    Those outlet shops will cop a pasting I’m sure, and every cent will help.
    Have already spent around $8000 on airfares and some accommodation, so most of the big ticket items have already been accounted for.

    I doubt you would be able to buy any house in the Brisbane City Council area for $300K range, and if there was one, I doubt I’d want to live in it.
    You need to go out to the regional council areas to get that sort of “value”.

    Median unit prices are in the $350k to $400k range around us, with house prices being too varable to believe the median price month by month.

  35. bearamundi says:

    Nah, I don’t think about mortgage payments Biker, at least not as regularily as you suggest. I’m salaried and just spend what is left over, which is plenty really. I’m probably just trying to be more conscious about finances.
    I think I can see what you guys are doing in part. Aren’t you looking for govt created pricing distortions, and cashing in on them?
    e.g solar is artificially cheap so check it out and if the numbers look good, then speculate on it.
    davo, I’m thinking about $300,000 as a start-out. That is a ‘reasonable’ price but what would the payments be? Somewhere around $2000 pm. To me that is a lot to spend no matter where you live. I cannot see quality of life in such a decision, and you are vulnerable too.
    Also, why would it cost more to live in the CBD? I personally don’t get that either, I’d go out of my mind ‘downtown’. They should be paying us for living de-void of nature.
    $8000 for 3 airfares? Isn’t that high as well? Not wanting to be insensitive davo (unlike _others_ on this site :D ) but my family of five went to Finland a month or two back for under 5K. NZ in 4 weeks for $861 all up. Do you hunt around at least 9 months in advance on the net? There are good bargins….however, I understand you might be locked in to set departures etc. Just something to think about maybe…. :)
    What do you guys think about passive heating/cooling? That is a subject close to Scrooge’s heart.

  36. Davo says:

    Bear, of the $8000, over half is for accommodation costs so far, with more to come. Return airfares, including internal flights cost us $4300, thanks to almost 500,000 frequent flyer points, gained from credit card mostly.
    Have yet to purchase accommodation in New Orleans, Orlando, Miami and Key West.
    It will be our last big family holiday, as hopefully, the kids won’t want to come next trip. We are locked in to certain times, but compared to last US trip in 2006, this one is cheap so far. Travelling in December is expensive, particularly the homeward leg 3 days before Xmas.
    Long time dead, so keen to enjoy while we can.

    Benefit of living close to CBD is only there if you work in CBD.
    I personally can’t stand the city, but I do love the short time it takes to get places, having lived 23 kms out for a number of years.

  37. Biker says:

    “…thanks to almost 500,000 frequent flyer points, gained from credit card mostly…”

    Only way to go!~ :D

  38. Biker says:

    “Nah, I don’t think about mortgage payments Biker, at least not as regularily as you suggest.”

    Could quote you verbatim, but I’m going through a ‘sensitive’ phase, Bear. :D

  39. bearamundi says:

    good one davo re points, that does look like the way to go I agree. Something else I have to look into. Sounded like a gimmick to me but maybe not.
    I agree too in that life is what you make it. I admire your choice to enjoy your family while you have the opportunity. Also great for your children in that they will probably learn to value their education and lifestyle moreso than many of their peers.
    Yes Biker, will the real Bearamundi please stand up! Probably frustrating and at times fascinating to those close to me. But I tend to spiral upwards and sometimes get the jump on the competition. Maybe being consistent is thoughtlessness?
    When are you getting the 1200?

  40. Ned S says:

    A ‘sensitive’ Biker – This’ll be fun! Bit like a ‘subtle’ Steve perhaps? Or a ‘nice’ Ned! :)

  41. Biker says:

    “When are you getting the 1200?”

    One more bike to sell, Bear. Just bought the boat, so the new bike will take a little longer.

    When do you get the KLR650? (Why not sell a sub-woofer? :D )

  42. Biker says:

    “A ‘sensitive’ Biker – This’ll be fun!”

    Nah, I figure if Toe-Knee-a-Bott can do it, so can I, Ned. I intend to vacuum up all the bile, reprocess it… and spit-it-back-out as smileys :)
    winks ;) and big smileys :D

    The Bulls’n’Bears will form a coal-ition (a clean one, of course).
    The Bears will be invited to lease our rentals, saving themselves megabux to invest in shiny stuff, goldmines, sugar, sound systems and other sweet stuff.

    It’s the WAy of the future, Ned. :D

  43. Ned S says:

    You have to remember that ‘Toe-Knee’ has 700,000 more good reasons to be sensitive than you do Biker? Hey, we might be mates but I reckon it still could be a close run race? :)

    WA – Yes, if we don’t boot out our boss next election, I’m going to have think about the possibility of doing a “Go West old man” routine.

  44. Biker says:

    Well, I thought his mortgage was $500K, but maybe it’s $700K, Ned.
    That’s only a lot to borrow if you’re not pulling rent, mate!~

    You’ll definitely have to come over sometime, though; regardless of a possible mutiny. :)

  45. Don says:

    “When do you get the KLR650?”

    That was my last bike, I loved that thing until someone stole it :(

    The police took me to see it when it turned up a year later on the back of some dude’s ute, it had been converted into a farm bike. Holy mother of moses I had to take a good hard look at the poor thing before I realised it was mine, very sad :(

  46. Bearamundi says:

    Looking at the KiLleR (meant in a cool way) as we speak Biker!! Enjoyed Don’s thoughts too (commiserations). Big single thumper with a cult following. OK, not in anywhere near the same league as your 1200 but still you can’t say it isn’t a good bike. They are $8,500 on road new, but I think I’ll be able to get a good one for $6000 all up.
    Was kind of interested in a Burgman 650 as well, but I think the killer is more versatile. What do you think Don? ‘Bad boy’ (but subtle enough for powering out of the carpark at work)staintune exhaust, good for Saturday morning recreation in nature with my son, commuting 1-2 days a week, and occasional trips to my bro’s place in Bendigo, or sister’s at Surfer’s.

  47. Biker says:

    “…you can’t say it isn’t a good bike…”

    You’re right, dammit, I’m in my ‘sensitive’ phase. ;)

  48. bearamundi says:

    I like Biker 2.0 :D One of the funnier T-shirts has the angry beaver snapping a branch between his teeth and muttering “Dammit!”.
    I was reflecting on your plight in WA, they need more incentive re solar and gross metering too, states should have a more co-ordinated approach, isn’t that what those guys get paid to do?
    The Eastside rulz!! :D

  49. Don says:

    Good luck with your decision Bear. I went with the KLR 650 when I moved back to Cobar in NSW. I drove it to and from Adelaide a couple of times (994kms each way) which proved to be a bit uncomfortable – but she did the job :)

    The large fuel tank was also a good feature – 21 litre if I remember correctly? Gives you a good range as I was getting about 18-19 kms/litre highway riding. Maximum speed was about 130-140 kph not too shabby for one cylinder hehe.

    I had to get rid of my Kawasaki ZZR1100 1995 as I was going to bloody kill myself on that thing, it hit 240 kph on a trip between Cobar and Broken Hill with plenty to go on the throttle (on my way to trade it in at Adelaide) before I came to my senses after I become airborne after hitting a small bump in the road…..only to rev it up again about 40 mins later. It definitely put flesh on the bones of that saying “where the thrill of the speed is greater than the fear of death…” For me death starts to win at over 180, ridiculous and am not going back there ever again.

  50. Biker says:

    “…the angry beaver…”

    Talking to east coast Canadian offroad biker groups, we’ve found they’re mainly KLR (and KLX) riders, but not by choice… . Canada just won’t import the range of bikes Aussies have on offer. Nova Scotians are particularly bitter about that. It’s giving Suzuki an opportunity with V-Stroms, but riders are still annoyed about their limited choice.

    Solar: We intend to lobby the WA government re its breach-of-promise; a 7c per unit discrepancy between the 40c per unit paid… and the 47c they committed to pay. Makes no real difference to us, personally, at this stage, as tenants benefit from all five (so far) solar installations; but misleading the populace isn’t on. We will make it a (re)election issue…

  51. Biker says:

    “…it hit 240 kph on a trip between Cobar and Broken Hill…”

    A little too quick for me, Don.

    We hit 206 kph, lane-changing two-up, on a German autobahn in ’05, but some bikes were passing us 100 kph quicker there at times. Same on the autostradas in southern Italy.

    We’ve been riding only v-twins since 1992. Free the twins… . ;)

  52. Bearamundi says:

    Yeah, DR’s are nice too, and in some ways nicer, definitely mechanically purer with simple air-cooling. Good luck with the WA solar scam too, that’s not fair.

    240 k’s is mighty quick Don, good on you for getting out of that one. You can drive past anything at that speed but the gas station as they say.

  53. Don says:

    It was dumb dumb dumb that sort of speed :(

    I am very grateful that I started riding bikes in my 30’s and not before otherwise guaranteed I would have come acropper at some stupid speed. I am completely competent putting around the city as well as reasonable speeds and conditions in the country but I aint no Valentino Rossi. Anyway it is all good, no one was hurt and I am older and wider now :)

  54. Don says:

    Whoops I mean wiser – oh you get the picture :)

  55. Biker says:

    The DRs have a following, but seem to be traded fairly early: 20,000 – 30,000kms. We’ve pushed all our twins into the 80,000km+ zone, with no problems at all.

    The trick is to find a bike that will last us another two decades… and do it _all_.

    Our choices are the KTM990 http://www.990adventure.com/ Honda’s Varadero;
    BMW Adventures, including the new GS800 ; Multistrada 1200 ; Triumph Tiger.

    I also like Triumph’s 900cc Scrambler, but the missus gave it the big thumbs-down. Likewise with KTM’s 690. Neither suitable for really long trips… . She says the GS800 is questionable with its current seat, but we fit customised seats, anyway.

    This may well be my last MC purchase in Australia, so I’d like to get it right. The new ‘Strada costs about the same as a good SH stereo, so it’s probably the way-to-go… . ;)

  56. Ned S says:

    I do appreciate the joys of two wheeled transportation; But have I seen some crazy men on them! It’s as if a few blokes use them as a means of acting out their frustrations at never having qualified as airforce fighter pilots? :)

    Not to say that a certain number of four wheeled transportation fans don’t come across as frustrated AA gunners. But we all know that I guess!

  57. Biker says:

    Well, my dad flew Beaufighters, Ned!~
    No Top Gun ambitions here, mate.

    Very impressed with the National Press Club’s ‘Independents’ Day’ presentation. Looks like it’s _gunner_ be difficult for Tony or Julia!!-

    And what a classic close-up of Julie Bishop, giving her best raceday face:
    Hoof Hearted… . I saw several garden gnomes explode! :D

  58. Ned S says:

    Confucius say May all Austlalians have intelesting elections maybe Biker? ;)

    I’m trying to not look at it too often. And just stay focussed on the wider world for now. Our turkeys will eventually sort something out if only because they need the jobs! :)

    Beaufighters – I’ll probably make a mug of myself here – Twin engined Brit night fighters IF I recall correctly? And I very well may mightn’t!

    Lordy, your old dad surely would have had some stories to tell if he ever should have chosen to. Check out the stories on their Lancaster bomber personnel – Only 5% lost each mission. But get your lad who’s good at maths to figure out what the attrition rate was after a tour of 30 missions and it’s enough to convince most people that even winning wars has its downsides! (Some of them actually had a crack at doing a second tour I’ve read?) But don’t ask him about the tail gunners – That was a rather messy place to be … :)

    Saw your invite. Ta. That would certainly be great. I hate travel. But irrespective of that huge downside I’ll certainly keep it in mind and it’s very much appreciated.

  59. Biker says:

    Chalet that sleeps ten is yours when you want it, Ned. Bring the family if you like… . :D

    I think my dad’s big sad was his squadron not meeting his brother’s Catalina to escort him home from mining Manila harbour. He’ll be found one day.
    Dad always hoped it might happen during his lifetime… .

    Watching ‘Hot Property’ right now. Gotta laugh. You’d never catch me in an auction (again). Jeez, I told our second son to buy that Melbourne apartment on the 38th floor, two years ago. He’d have picked up $180K, at least!

  60. Ned S says:

    “my dad’s big sad was his squadron not meeting his brother’s Catalina” – Yep, my granny had one of them. A much loved slightly younger bro who just totally vanished in the mire of Flanders’ Fields? I kind of like to imagine he might have done the smart thing and bolted with some cute young Belgian chickie babe – But really doubt he did. Wars are very good things to stay out of mate! :)

  61. Biker says:

    “Wars are very good things to stay out of mate! :) ”

    The loss finished my grandmother off at 54, Ned. You’re not wrong, mate.

    Hey, have the op, Ned. You won’t regret it. Short term pain, long term gain.

  62. Ned S says:

    How did you know I was considering my 4’th vasectomy Biker??? ;)

  63. Biker says:

    Hey, ya think I’m a pain-in-the-arse now? Imagine what I’d be like if I hadn’t had the op at 30???!!!~

  64. Ned S says:

    Still haven’t figured out how to make 6 stars show up on this site? :( D)

    PS: I’m ‘registered’ – As opposed to ‘neutered’ maybe! ;)

  65. Ned S says:

    I never should have left that kindergarten class I see … :(

  66. Biker says:

    Five’ll hafta do, Ned…

  67. Biker says:

    Funnily enough, I’ve discovered that the ratings system doesn’t work on some browsers… Safari and Chrome for example. Firefox and Camino work OK.
    Took me a while to figure out that Mozilla-based browsers work… and the others don’t. Ignoring Google Chrome is a mistake, DRA. It’s the fuschia…

  68. Ned S says:

    You are seriously confusing me with all those strange words Biker – Fuschia – I’ll give benefit of doubt and assume you aren’t actually saying anything rude which means you are talking about some sort of red, grey, brown colour in Oz right??? :)

  69. Biker says:

    Google Chrome: budding flower of the internet, Ned. :D

    Well, Abbott just self-immolated on late-night television, mate. Don’t know if you saw it, but Tony A just made his first real misstep in the 2010 campaign… .

  70. Ned S says:

    “Abbott just self-immolated ” – Nah, missed it mate. But somewhat honest people tend to do that in our society – It’s a bit of a pity I guess … But hey, no alternative this electorate’s likely to accept? :( :)

  71. Ned S says:

    So sounds like it’s off and running all anew for big red in the marketplace then. How exactly does a bloke spell that suk…, sees…, cesss… word again Biker? :(

  72. Biker says:

    Well, if it was a poker game, the Independents just said: “We’ll see ya.”
    And Abbott folded. Publicly.

    My view? Game Over.

    Headlines in every Oz paper tomorrow? It’s likely.

    One theory is that the Libs intend to force another election. Risky biz. :(

  73. Ned S says:

    Can you tell me that recipe for rabbit and weevil stew again? :)

  74. Biker says:

    HaHa…!!~ Funny thing, Ned. Dead kittens everywhere, near pop-holes. Mixy or Calicivirus? Who knows?

    Well, it looks like the US may double-dip. I do have a good cockatoo-broth recipe, from the 1930s, mate.

    Seriously, I can stick a coupla lures over the stern and dine on fresh pelagics anytime. That’s the big plus over here, Ned. Half-a-century less raping and pillaging.

    Things could be worse. We could be up north. WAY up north… . ;)

  75. Ned S says:

    “We could be up north. WAY up north…” Amen bother, Amen – I’m not rushing to feel what their filter down effect feels like now OR anytime soon! :) GO ASIA!!! :) :) :)

  76. Biker says:

    We’ve been just a little worried about rentals, lately… as a few of our big earners’ leases began to expire after 2 – 3 years of high rents. All that changed this week.

    Demand is up, much of it from interstate and OS families, including NZ.
    I’m sure it’s the Asia factor at work.

    (Haven’t shot or snared a bunny for several weeks. Did find a fishing lure I thought I’d lost nearly three decades ago: the Big-O. Superb piece of gear, which accounted for a lot of game fish in the early 80s. Googled it, to learn that fishos are actually trying to buy these original out-of-production lures on eBay!~ :D )

  77. Biker says:

    Apparently it’s all over in two weeks, Ned. Mark 7th September on your calendar. It’s a Saturday, I think. Always thought the world would end on a Tuesday, dammit!~

  78. Don says:

    ” I do have a good cockatoo-broth recipe, from the 1930s, mate.”

    Is that the one where you boil your cockatoo with a pebble and wait until the pebble is tender before eating the bird? :)

  79. Lachlan says:

    You talking fish without me BP? :( :) Did some fishing at Sarina last Autum. A good mix of stuff there inc. Barra, Burnett Salmon and the odd croc :( I only had two hours to throw a line for a flathead and a few bream. There were some pelagics chopping around me but was lureless at time..borrowed some rods off a local horse breaker/mad fisho…late late arvo, full moon rising over water…magnificent :) Sounds like you have some relatively unspoilt waters near your place. Pelagics…got some home made poppers here that’ll clean them up :)

    Oh.. we used to grow fuchsias Ned..in pots..for sale..in our nursery..on top of a high mountain range where it was cold.

    Gotta go now.

  80. Biker says:

    With names like Madfish Bay, you can imagine the fun when school’s in, Lachlan. How can the Greens lock me out of hundreds of kilometres of great fishing? GRRRR!~ :(

  81. Lachlan says:

    Glad you dont vote for the WORST PARTY the BP ;)

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