Your Garden Variety Global Financial Crisis or Something Wilder?

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Watching a giant kettle and tea cup stopped at the light in front on the Prince of Wales this morning, we wondered is it all just a tempest in a tea cup. St. Kilda Festival is on this weekend. So the carnival has come to town. It has put us in a carney mood.

Today’s Daily Reckoning will try to sort out if this is a garden variety global financial crisis or something wilder. We’ll also connect the dots between Ken Henry’s comments on debt yesterday in the Senate, and why Stephen Conroy made sure you couldn’t read those comments.

But first, why are companies hoarding cash? Bloomberg reports that companies in the S&P 500 have increased their cash holdings to an aggregate US$1.18 trillion dollars. The big blue chip multinationals have cut spending, frozen new hires (not literally), and generally kept cautious until more details emerge about the economic landscape.

Here in Australia the landscape doesn’t look all that bad. Rio Tinto followed BHP’s wowser result with a good one of its own. The company said it’s in cautious expansion mode after reducing debt, cutting costs, and posting a $6.29 billion annual profit. Iron ore, debt, and cash all collided on the same balance sheet.

Speaking of which, Diggers and Drillers editor Alex Cowie sent through his February issue for our review last night. Alex and his wife are getting ready to welcome their first baby into the world any day now. But he’s shown admirable focus this week looking at the latest financial statements to figure out which Aussie resource firms have the highest net cash to market cap ratios.

It’s not the first time Alex has used this financial ratio as a lead generator for investment ideas. It’s especially useful if you think credit is going to be tight. You don’t want companies that have little cash and lots of debt to roll over. That makes you vulnerable.

Alex’s list of the top twenty included a fair few energy and gold companies. But near the top of the list were a few iron ore hopefuls. And as Alex has already added gold and energy recommendations in the last six months, he’s tipping some of the ore stocks this month. D&D readers will find out which ones after the market closes on Monday.

Poor old Barnaby Joyce keeps copping it from an establishment determined to diminish worries about Australia’s long-term debt. The Senator asked Treasury Secretary Ken Henry if growing debts and more borrowing would lead to higher interest rates in Australia. The Secretary replied that, “That is a gross over-simplification of economic understanding of these matters… I think we should be … careful not to rush into simplistic relationships between levels of debt and interest rates.”

The full exchange between the two is not available at the moment because hackers have shut down the Australian Parliament site with a Denial of Service attack. More on that in just a second. But in the meantime we’ll just have to guess at what the Treasury Secretary meant by “economic understanding of these matters.”

If he meant the understanding of the economic establishment is that debt is a critical part of the world’s economy, he’s probably right. That is, most of the clods with Ivy League degrees who failed to forecast the GFC have no understanding at all that the world’s financial system is burdened by far too much debt. Most of them appear to have learned nothing from the crisis, except, perhaps, how to make fun of people who understand intuitively that you don’t get rich by spending more money.

Of course it’s true that more debt does not automatically lead to higher interest rates. Suggesting there was such a “simplistic relationship” between too much borrowing and the cost of capital would be…well…simplistic. Simplistic is pejorative. If it were just simpler, or just simple, it would be better.

Therefore a simpler understanding of the relationship between debt and interest rates is this: if you borrow a lot and invest in it unproductively, the debt will be a lifelong financial burden. And if the more short-term your borrowing is, the more interest rate sensitive is. The debt may not lead to rising interest rates directly. But if rates rise anyway, the debt becomes even more burdensome.

It’s not an issue of Australia’s credit-worthiness, at least not yet. Rates aren’t going to rise because international investors view Australia as a greater credit risk than, say, America. But it doesn’t matter. If rates rise globally, Australian borrowers (household, corporate, government) will again find themselves way back in the queue of those with empty pocket and hats in hand. Like everyone one else, they’ll pay more to borrow.

That is the ultimate risk of financing so much of your prosperity with debt (instead of savings). Your continued growth is depending on your access to credit. And if, for any reason, that is cut off, you’re in trouble, not to mention you’ll have to dedicate a larger portion of your national income just to service your debts.

No matter what the Treasury Secretary says, Australia does have a huge net foreign debt figure. The country has chosen to finance its growth with borrowed foreign money. That is what it is. But let’s not pretend than on the face of it, it’s no big deal with no big consequences.

By the way, why was the Parliament website under assault from global hackers? Well, who knows? But it could have something to do with the fact Google revealed yesterday it had been asked by the Australian Government to censor certain YouTube videos by putting them into YouTube’s “refused classification” category.

You cannot be serious.

Communications Minister (increasingly an ironic title for a man bent on censoring the Internet) Stephen Conroy apparently asked Google to filter Australia’s YouTube content the way it filters content in China and Thailand. Google, which has recently found a backbone about cooperating with the ‘requests’ of oppressive regimes, said it would not “voluntarily” comply with the request.

So if the Minister wants Google to censor Australia’s YouTube options, he’s going to have to do it the old fashioned way, via legislative coercion. The minister, via the government, appears ready to just that by submitting legislation that would force Aussie ISPs to block websites that were “refused classification.”

Ah yes! The famous black list. No one knows if they’re on it, how they got on it, or how to get off of it. But someone in the government keeps it and if you’re on it, may god and a very good legal team help you. It’s astonishing that after so much opposition, the Minister pushes ahead with his plan. It’s almost like everyone in government thinks you need to be protected from yourself.

Some people will say that reasonable attempts to police the Internet aren’t any different than attempts to police the real world. The distribution of pornography is regulated and limited. The same goes for alcohol and tobacco. Why, the argument goes, should the Internet alone be free of any sensible attempt to determine what people are allowed to consume.

Well, why not let sensible people make that determination in the privacy of their home, as adults? If the government gets to determine what’s sensible for you to see, they will invariably abuse that authority, even if it begins in good faith (protecting kids from sexual predators, for example).

But it’s hard to see you promote a free-thinking and thoughtful society by controlling what people see. That’s paternalistic. What’s worse, it’s a well-dressed up and mild-mannered kind of authoritarianism that should be mocked, resisted, and defeated whenever you get the chance. Don’t worry. They’ll keep coming for you. You just have to keep fighting.

Or have we finally lost the plot? Are we so deeply immersed in the idea that the funding model for the fiscal welfare state is fundamentally broken that we’re being unreasonable? Maybe. But we hope not.

In previous financial crises, the contraction that came with global recession was avoided by either more money or cheaper energy. These kept the whole system growing. Capital and energy are important inputs into any growing system.

But what we’ve seen in the last year is that the flood of capital and credit has gone to prop up fewer and fewer large institutions. The big governments bailed out the big banks and left the little banks to hang. But who is going to bail out the big governments?

They’ve taken on all the risks and bad debts of the private sector. Now all that risk is concentrated in fewer places with a greater strain. These governments aren’t too big to fail either. But their failure will be even more catastrophic for ordinary savers and investors.

That’s what’s different this time, we reckon. For the better part of 200 years, the tides of prosperity have lifted more and more people out of poverty. Mind you there are still billions of people living on less than a dollar a day. But standards of living for more people are higher than they’ve ever been.

We wonder now if the 200-year expansion is due for a contraction. More expensive energy and credit slow the growth of the system. More importantly, globalisation is clearly detrimental to the interests of some nation states, especially in those countries where wages are falling at just the time millions of Boomer’s hope to retire on generous pensions or accumulated financial assets (houses and stocks).

That’s not a tempest in a teacup. That’s a teacup shattering on the kitchen floor when you realise the government is coming for your 401(k) or Superannuation assets to pay for its deficits, which in turn pay for promises it can no longer keep.

Even if Europe finds a cosmetic remedy for the Greek crisis, the real problem is a world that borrowed a lot of its current prosperity. The debt overhang is too great to permit an easy way out of all this. Default in the debtor nations which borrowed in Euros and dollars is inevitable.

For the UK and the US, which largely borrowed in their own currencies, inflation is much more likely. In this scenario, we’d again recommend you sell into rising stock markets when you get the chance. Stocks could rise as investors shun sovereign debt markets. And once the Fed, like the Bank of England, is forced into monetising more government borrowing right away, look out for much higher precious metals prices.

Yep. It’s a carnival of creative destruction. Stay on your toes! Until next week…

Dan Denning
for The Daily Reckoning Australia

Dan Denning
Dan Denning examines the geopolitical and economic events that can affect your investments domestically. He raises the questions you need to answer, in order to survive financially in these turbulent times.
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Comments

  1. DD is on it today. I may have mentioned it some time in the past, but I am reminded by two pieces read today of the German “rentenversicherung” (super) system. The two pieces today was one from Kohler where he too ate his weeties about unfunded govt liabilities and just how underwater the overgenerous greek pension is, and the other was the announcement by the UK conservatives that they are going with the death tax.

    I didn’t get alot of ticks when talking about death duties as possibly the only way out in terms of servcing the over the odds component of mortgage debt when our asset bubble pops. The only justification I have for applying it is the size of the hole to come and that it is the least regressive of taxes and that we are not going to be able to finance it with government borrowings. I would also recommend, in terms of reviewing it from a source of contemporary Australian policy making on taxes, the Casey report in the late 70’s which addresses it (I can’t wait to compare the bloated drivel wrapped around glossies of King Ken Henry shaking hands with wombats all over Australia with that of the succinct neatly typed Casey report in which he gave his secretary and editors a deserved wrap).

    But I should explain it further in terms of how the Germans maintained their tax base. You see Germans get paid a good percentage of their retirement salary post retirement from the versicherung pool, but the trick is that they don’t own their contributions and they would only do well if they lived to be 100. And the thing with German men is that they have tended in the past to be workaholics who retire and die quickly. The wife then gets only a reduced payment until her death. So you have it, death duties in disguise.

    The trouble for Greece and Australia might be that we’ll all take the money with a big smile and live to 100! But Henry & Rudd could do something about that too couldn’t they? An Australian govt and Kochie and Mel and Kerrie Stokes cooked up Jonesville perhaps?

    “Inherited wealth is a curse” so said by some notables, and I agree in part where expectation changes for the worse the drive and behaviour of youth. They should always be made assume that it is all going to that Pet funeral place in California. That’s a note for Bill Bonner.

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  2. I never stopped being amazed by officials that dismiss the level of private debt in this country. Then I’m astounded why people can’t see the link between increased debt and ballooning asset (house) prices. Give people more credit they spend more, they spend more asset prices rise so they get more credit, the cycle continues until the debt burden can no longer be serviced and/or the lines of credit are reduced. That is the trouble with using debt to speculate on prices, its all good until it isn’t. Like any ponzi scheme its those that hang on and don’t take profits while they are there that get burnt, they are the Patsy.

    In the words of Warren Buffet “If you don’t know who the PATSY is – YOU are the PATSY”.

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  3. The trick Roy is to make them feel richer, then they borrow more, and they consume more, and they generate more consumption tax. And when it all goes poof Henry will hide with his wombats.

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  4. I can think of a few points to add.

    Firstly, the debt trail leads to who owns what, but owning and controlling are different matters. If you own land, but don’t control the military, you ultimately do not control the land and _ultimately_ don’t own it but depend on the good will of the military guy. But within countries, the debt equation predicts who will be rich and poor in a short while – depending of course on the good will of the military guy. Those in debt will find themselves poor. ie: they that have not, what little they have will be taken away. But beware of being too greedy and forgetting the poor, as an excessive imbalance results in civil disorder, martial rule and redistribution according to some political ideology. Rich selfish buggers stand to lose – decapitation wasn’t out of the question in the past.

    Secondly, when all is said and done, real economy arises from the creation, usage and exchange of tangible goods and services, not currency. Take the Eastern Bloc after it was annexed by the Soviets – new currency, new leaders, etc. Nations that were doing well in the 1920’s did well in the 1950’s and beyond, because the basic economic structures which arose from the geography and local culture could not be erased, even after the mass deportations. Those same nations are doing well today. Even though much of their infrastructure is ‘owned’ by foreign national companies, the countries continue along a path of relative prosperity because of the right mix of geography, climate and people. They were and continue to be the region’s breadbasket.

    Thirdly, an analogy on marriage: In surveys, more than 75% of the problems identified by couples before marriage persisted 20 years later. No amount of effort could overcome such problems, which means that survival of the marriage depends entirely on learning to manage and live with those problems. So it is for Greece, or any other country – most of the problems of Greece ie: its corruption, its business oligarchy, the limitations of climate and landscape, will always be there, short of a massive, life-changing event such as invasion and/or total destruction.

    They can create an EU with its shadow undemocratic government, force a single currency, and so forth, but you will see that Germany will continue for the foreseeable future being a manufacturing and industrious nation and Greece the disorganized mess that it has always been.

    So the storm is both a teacup, but ultimately the fraud of world banking will irritate to the point of using militaristic solutions for economic problems.

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  5. Ross: “The trick Roy is to make them feel richer, then they borrow more, and they consume more, and they generate more consumption tax.”

    No question that the Brit banks exploited this human weakness, Ross.
    The difference between Oz and the UK is that they _have_ so little to make them feel good about themselves… and their situation… and are far more susceptible to the equity drip feed.

    We very much take for granted our Australian way of life, but I also suspect our cultural and personal morale is far more resilient… .

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  6. Just want to add a big quick NO on the internet censoring/filtering or what ever they want to call it ! !

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  7. While I think it’s good that Barnaby Joyce is stirring the pot, it is simplistic to equate rising debt levels with rising interest rates.

    Debt levels have been rising for many years yet interest rates have been falling. In fact debt levels are as high as they’ve ever been yet interest rates are close to Great Depression levels.

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  8. You sure that you are not being simplistic Justin?

    High debt levels = higher risk = higher interest rates
    (and higher interest rates ironically increase the risk)

    But it does depend on whether you are talking about private or sovereign debt. High private debt is better understood by the ability of borrowers to service that debt in the future – which relates to the current and future state of an economy. Sovereign debt should be thought of in the same way, just from a more global perspective.

    However I believe it takes a bit more time for the lenders to realise just how much risk soveraign debt can be. In recent times, it has been considered almost a zero risk. Those times are a changin’.

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  9. So why are government 10yr bond yields are currently at around 5.5% with government debt issuance at a record $120 billion & M3 (one of the broadest measures of ‘money’) at $1.2 trillion?

    In 1990 the same 10yr yields were nearly 14%, with government debt at around $40 billion, while M3 was a mere $225 billion.

    There is no absolute correlation between debt levels & interest rates.

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  10. Perhaps there is just no correlation between now and 1990…

    I’m not saying that I am right and you are wrong. But it ‘makes sense’ that the more debt any entity has, the harder it will be to service that debt. For that reason, the risk for providing further debt increases.

    Oversimplified analogy:
    Bob earns $10K a year. He borrows $50K at 5% interest. It costs him $2.5K to pay the interest each year. Would you lend him another $50K at 5%? What about another $50K at 5%?

    I am oversimiplifying too, but the risk of problems paying off the loans increases.

    Also, if global credit dries up somewhat, Governments WILL be competing with the private sector for credit. Who will get the credit? The lowest risk entities first. The higher risk entities will only be able to compete for the credit by offering higher returns (rates) on borrowing.

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  11. Sambo: “Who will get the credit? The lowest risk entities first. The higher risk entities will only be able to compete for the credit by offering higher returns (rates) on borrowing.”

    Already happening… .

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  12. Just for a bit of healthy alarmism:

    “Yes, your enemy is that “Happy Conspiracy:” It has degraded into a pseudo-capitalism with no conscience, no sense of the public good, hell-bent on controlling America’s mind, your money and the global markets for its own selfish ends. And eventually it will trigger the game-changing global-debt bomb, the third global meltdown of the century that finally ignites the Great Depression II, plunging us into an era of anarchy.”

    Everybody run for the hills! (At least the real estate up that way is half decent!)

    http://www.marketwatch.com/story/how-to-invest-for-the-debt-bomb-explosion-2010-02-09

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  13. In which city would you buy realty, Dan? The grass is always greener… well, not always… . Son # 2, drafted into a ‘reality TV show’, probably to add some Aussie flavour, found himself housed with a group of young blokes (with a host of young lovelies brought in to lounge around the pools) in a mansion previously on sale for $7 mil, now on sale for $2 mil. Las Vegas? He was totally unimpressed… .

    In our US travels, we’ve never once been tempted to buy in the US or the UK. Canada, perhaps. But unless you like forty below, you’ll be paying higher-than-Aussie-prices in Canadian cities with halfways acceptable weather.

    I’m always intrigued by our ‘grass-is-greener’ view of the world. Having studied in North America; worked there for a year; and travelled across Canada and thru’ the US, I’ve found no place with a temperate climate, high wages and a comparable lifestyle in which to set up a NH base. France, perhaps… but even Bill has pulled the pin on la belle France.

    “Run for the hills?” Dan, this IS the hills… . :)

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  14. Which city? An undersized, under-developed one. The only way is up for those places, by definition. But quite importantly, the grass is greener where it rains, and that’s actually not a bad place to buy land.

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  15. Sambo, What if the asset/s Bob holds return 10%?

    There is also is issue of the issue of maturity matching; Is Bob borrowing short to lend long?

    Borrowing short to lend long is one of the main reasons for the GFC. That & ludicrously inflated asset values i.e Bob’s assets don’t return 10%, or his (borrowed) capital.

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  16. Justin/Sambo, the difference between now and 1990 on interest rates is for now the funny money and the supply side. If you look at that video i posted with Stiglitz … watch his twitches as he says it is ludicrous to suggest Greece should have to pay current rates, and that they are bred only of panic. But Stiglitz is also saying that his market has no risk price no matter how ill disciplined the sovereign or the private sector sponsored by the sovereign’s tax man. Thats what you get from one whose base is the 19th century romantic socialist claptrap he has written.

    How long does this ability to look back on 18% as an abheration? Only as long as the racketeers control the supply side …. and can a current account deficit private sector or underwater sovereign keep it at zero with just creationism and no capital surplus country funding? It is all falling to bits on stiglitz and his mates.

    We need a supplementary to the VIX index, an AMO index (ammo commodity). It can catch both public and the private sector fear. Capitalism and socialism may both respond to profit and to protect their own respectively on the supply side but demand may well overwhelm.

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  17. BHP seems fairly optimistic:
    http://www.watoday.com.au/business/bhp-hints-at-ore-price-surge-20100214-nyzb.html

    Meanwhile….

    … driving south from Vancouver, through the states and down into Mexico in my M-I-L’s convertible a few years back, we were looking for that “…undersized, under-developed…” city, Dan. Never did find it. What we found was over-priced beach suburbs which had us scurrying back to Oz to buy land fronting vastly-superior beaches in WA!

    Really, instead of just talking about buying over there, many Aussies need a year or two actually living there. Wages are, for most, pretty poor; and while high rainfall may occur most months of the year, much of the US has fairly ordinary weather (compared to ours) unless you’re way down south. Desirable localities in North America, with really good weather, aren’t all that cheap. Maybe Miami… but I’d hardly call it undersized, or under-developed(!) California? Used to be great, back in the mid-70s, but after several visits later, you’re welcome to it. Surf rolling with umpteen trillions of tiny aluminium particles spawned by WW2 munitions factories; parking meters along main beaches, if you can get that close; 23-lane highways, littered with smoking wrecks from time-to-time; 100+ parked cars all with the back windows smashed by some fool with a baseball bat overnight; minimum wages _none_ of us would work for… . California, with its economic woes almost equivalent to those of Greece?

    I’m sure the utopia you seek in the US probably exists. When you’ve found it… and lived there awhile, please blog us!!~ :)

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  18. Justin: Since when do Australians borrow money to make more money?

    The private sector and Government are consumers.

    Yes, some people borrow to make money. Big business, small business and speculators. Business rates are through the roof, but speculators are doing okay for now.

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  19. Sambo: They borrow money to buy real estate maybe?

    Benchmark 10yr yields have been, more or less, falling since they peaked in August 1982 at 16.5%. I don’t have exact data but corporate yields have also fallen, yet debt levels have increased exponentially since then.

    Debt levels were, at the time, at extreme levels prior to & during the Great Depression yet interest rates were very low.

    The notion that rising debt levels means rising interest rates is simplistic.

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  20. Heat on central bankers, the source of Justin’s simplistic – here’s one where they kept rates up – http://www.zerohedge.com/article/exclusive-bank-england-engaged-flagrant-gold-manipulation-interwar-period-new-york-fed-does-

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  21. “The notion that rising debt levels means rising interest rates is simplistic.”

    the notion hinges on the question – are available funds finite?

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  22. “the notion hinges on the question – are available funds finite? ”

    No they are not as has been proven… the giant ponzi scheme that is capitalism runs out of money it collapses….

    Stillgotshoeson
    February 15, 2010
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  23. finite/infinite

    For CS, look up the difference. Here’s an example that may help you, son:

    “Gawd, the ignorance here is infinite…”

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  24. That’s the difference.. I can read what was written and understand what was meant… you however. with your can’t think outside the box mentality can not, this is why your ignorance is bliss to the state of the economy ;-)

    Stillgotshoeson
    February 15, 2010
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  25. How can I put this kindly? You know even less about your native language than you do about property. No, that seems a little unkind.

    Let’s _try_ to help you. Find something you know about… and, when an opportunity presents, show off online… if that’s what you desperately need, Shoe-son, or whoever you are. (Probably Steven, whose mental prowess rivals your own.)

    You said, in answer to the question: “…are available funds finite? ”
    “No they are not (so funds are _infinite_ )as has been proven… the giant ponzi scheme that is capitalism runs out of money it collapses…. ”
    How can funds run out if they’re _infinite_ , Wonder Boy?!?

    In rabbiting your simple-minded rhetoric, gleaned avidly from an uncritical internet, you fail to even realise that most here are _capitalists_; that we speak and understand English; and that your mum is, right now, probably waiting to use her computer… .

    I’d ignore you, but your smart-arsedness is so out-of-the-box, so smug and self-assured, that you’re prepared to forecast and timeline property movements that even experienced multi-millionares decline to predict. So, good luck with your investments. You’ll surely need lots and lots of the stuff. “…your ignorance is bliss to the state of the economy” ??! :)

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  26. Sorry, your the smug and self assured one here.

    I just tell it as it is, call a spade a spade, the economy has not recovered, the stimulus was a band aid on an artery and we are in line for a correction both in the share market and real estate.

    My investments are exposed to both, real estate, I have shares in Goodman Group and GPT, together 300000 of them.

    I currently rent as it is better value to me and invest the difference.

    My take on people like yourself is described in a scene from Saving Private Ryan when they are on the beach and a guys, (you), helmet takes a
    bullet and he takes it off to check out his good fortune and show everyone (dodged a bullet) then promptly gets shot in the head.

    Stillgotshoeson
    February 16, 2010
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  27. Infinitely funny, Shoe-son.

    I’ll rephrase:

    “In rabbiting your simple-minded rhetoric, gleaned avidly in a local cinema, you fail to even realise that most here are _capitalists_; that we speak and understand English; and that that’s your mum, right now, yelling to get off her computer… .”

    What is the language usually spoken in your home, BTW?

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  28. I read the DR, say 5 times a week. It’s fantastic – have been doing so since 2005. Sadly, around a year or so ago – Tricycle Pete showed up. It’s hard for Biker Pete to listen to what other people have to say. I think it may have something to do with the fact that he often forgets to take his helmet off. Secretly – I think he chooses to leave it on to save black eyes and broken jaws in public. Seems to know alot about Australia – although there are alot of pretty pictures available on the internet; particularly when the internet is your life and the only way you can get people to talk to you…. Your M.I.L. doesn’t count as a friend either.

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  29. There goes the monopoly board!!!!!!

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  30. Prefer your allegations of paedophilia, do you, Clay? Slime thrown up from gutter level splatters back on the upchucker, sport.

    Now I realise it must be difficult for those who’d like to see property crash, when it’s rising _infinitely_ faster than your Centrelink payment, but neither a headshot or a mudsh*t will make that happen, son.

    Let’s sit back and watch the _specific predictions_ of your fellow bears, shall we? Let’s see: 1 – 2 months; 4 – 6 months; 12 – 18 months, for the 40% crash, wasn’t it? (With Steve Keen’s 200km trek in April, as a minor diversion… . There goes the prophet of dooooom!!!!!!!! ;) )

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  31. I can’t believe your still licking those festy old wounds? To be honest I can’t even recall any of your lame comebacks. I work full time and my (real – not imaginary) wife works part time. We owe around $200k on a property we bought in 2005. I wouldn’t exactly call myself a bear, although I do have concerns. I’m fairly confident that I will weather the storm (if there is one). I guess though if the RBA cash rate hits something like 9% and wages are still stagnant I might have a problem. If I do, a whole heap of other battlers will be in the shit too.
    By the way, you never did answer my question as to whether you have EVER worked under someone? I’d appreciate some explanation here because you seem to have the arrogance of someone who has never had to answer to anyone.

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  32. id like to take a moment to clarify my 1-2months prediction while its being quoted. im not interested in winning an argument on the economic future, i am interested in finding the most likely scenario and will happily accept any economic insights from where ever they come from, whether they debunk my ‘predictions’ or whatever.

    i think we are facing a market adjustment due to the current macro risks in the global system – take your pick but Alt-A resets are one i think we cant avoid, whether it comes later in the year or sooner but i suspect that the impending problems there, lack of US recovery or the PIIGS issue will probably precipitate a major panic sell-off relatively soon. this will lead to stock market crashes and major currency movements similar to the GFC but the ability of china to tide us over will be muted this time round. global finance costs will incease and our finance costs wont be ‘protected’ to the same degree as last time, to the point that the RBA and government guarentees wont be able to fully combat these increases.

    this will lead to either a slow decline in australian property prices (only those forced to sell, will – im guessing 20-25% or so) or at least cap the potential for future growth, regardless of the supply problems i readily accept as very real.

    i could be wrong and it doesnt happen at all, liquidity increases and funding costs decrease, or it does happen but the RBA and government guarantees combat the increased costs effectively or china manages to push through further expansionary policies that the global markets believe will continue to support our economy.

    at the end of the day my first scenario is one that i see as likely at the moment, and i think a financial market correction will be the first occurance and potentially lead to finance cost increases and hence a gradual decline in property prices from there.

    i dont really put this at a 90% chance of occurring but i do think the odds are reasonable – maybe 40% or so in the first instance and diminshing as it flows through to the effect on property but the damage it would cause would be ‘unfavourable’ to me financially and like i said at the time ive got other reasons to look to sell too. i realise now im a renovator, i dont really enjoy hanging around in the market waiting for something to happen…

    as i said im not interested in winning the title of ‘being able to predict the market’ but its just my gut feeling that these events could occur and im keen to act on them for my own peace of mind and because it suits me in other ways.

    its my gut feeling and its ultimately just a guess but really, what else is there?

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  33. The hapless followers of Keen
    in Canberra will soon convene
    to consecrate their guru who’ll
    become our _best-known_ April Fool…

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  34. While Clayton may have feet of Clay, he did apologise!
    “I’d take it back, but words I lack to make amends here, guys.”

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  35. Here’s to Pete, he’s now moved to rhymes, what a treat.
    Propertay’s his thang, it’s having a good time, bow at his feet.

    I hope he does not have to eat his words, because most of them have been sheeeet.

    Enjoy the meal Bikey.

    Reply
  36. Needs work, Prozak. I’d advise you not to leave your day job, but I see you’re still shaking hands with the unemployed… .

    Reply
  37. Just to clarify for our new readers’ sake there was no allegations of paedophilia on my behalf. Postman Pete used to specify his location when posting and it would differ from post to post, sometimes several times in one day. I simply suggested that he was a transient internet cafe hopper unless his bike has wireless roaming broadband which I doubt. I merely suggested there was a correlation between his habits and that of paedophiles. Since then Postman Pete no longer posts his location. Biker is renowned for taking people’s words out of context and avoiding questions such as have you ever worked for a wage Pete? Still waiting for an answer…..
    Egotistical, narcisistic waste of air.
    You have no legacy to leave behind Postman. The state will take your wealth when you die because you have noone to bequeath your fortune to. Why have children? They could never come close to your depth of intellect.. You would always consider them parasites waiting for their inheritance. That’s what you did, so why wouldn’t they?

    Reply
  38. Do believe I found it – To be interpreted as ??? :) :

    “… Alot of transient creatures bouncing between internet cafes are child porn addicts and paedophiles – maybe this is not you – maybe you have to shift towns regularly (several in one day) because you saturate your ego and profound intellect onto the locals …”

    http://www.dailyreckoning.com.au/total-meltdown-of-the-aussie-housing-market/2009/08/28/

    Reply
  39. Whose side are you on Ned?

    Reply
  40. Biker says:
    “Needs work, Prozak. I’d advise you not to leave your day job, but I see you’re still shaking hands with the unemployed… .”

    Are you employed by anyone Biker?

    Reply
  41. Let’s all have a vote now: Who warms to “transient creatures bouncing between internet cafes” who may or may not be “child porn addicts and paedophiles” – But if they aren’t rock spiders, “saturate” their “ego and profound intellect onto the locals” … :) :) :) Jeez I love this site! :)

    Claytonator, if you don’t see it as being in any way personal to ask, just how exactly DID you get so clued up on the habits of “child porn addicts and paedophiles”? – From one of those in depth academic analyses like what Steve Keen dun on Oz house prices I certainly do BOTH assume AND hope!!!

    Cheers mate! :)

    Reply
  42. Claytonator’s slimy apology, later retracted, was the classic, Ned. Enjoyed your contribution, John! :)

    Reply
  43. Ned, the top bit is a bit convoluted. Lets keep things in context in future. Those that follow the link from your previous post and read the entire battle will judge for themselves. I don’t recall siding with Steve Keen directly in any of my posts either..
    Now – I am not offended by your personal question and am not treating it as an allegation either. So here is my explanation – basically anyone with a bit of networking knowledge would understand that by WAR driving or using Internet cafes you cannot be directly identified by your IP address. This means illegal internet activity cannot be traced to you – unless of course that cafe has CCTV cameras or ID required for use etc. Pretty straight forward really. Of course there are other ways also – proxies, IP scrambling software etc but generally ISPs are aware of these and have countermeasures in place. Ask your kids if this doesn’t make sense to you.

    Reply
  44. Hmmm…

    Here’s the next part of the saga:

    “Comment by Claytonator on 2 September 2009:

    My apologies Rob, Biker Pete and others – DR is a rarity and should stay that way – If I were able I would edit my post – so sorry again and I will keep my shots above the belt in future.”

    Reply
  45. Biker – can you enlighten me as to where my apology was retracted?

    Are you unemployed?

    Reply
  46. G’day Claytonator – “top bit is a bit convoluted” ? – If I was being represented in a court of law, I’d kind of hope my barrister might say something like “Prejudicial your honour!” And that the beak might even agree with him!!! :)

    But that aside, it’s got to be better fun than than chatting about Oz house prices!

    And for what little value it may or may not be, I can’t see the RBA rate getting to the sorts of levels that you indicate could cause you concern anytime soon at all. BUT even IF they did, they’ll just be there for a fairly brief time to slam inflation back into its box. During which someone in your situation goes chunna, chunna and accepts that the bank wracked a bit up against them to be repaid later. If you get my drift?

    Reply
  47. Don’t ya hate it when the past comes back… and bites you, Claytonator?
    Here’s a tip which may help you in life: If you speak the truth, you’ll never be caught out like that again… .

    How did you choose the strange tag, son? Were you perhaps influenced:
    http://www.lightstalkers.org/images/show/594022

    Your interest in my welfare is amusing, considering your numerous, continuing bad guesses in the past. (A few more today, by the way… .)

    To answer your personal question(s):

    I’m semi-retired, on a tax-free TTR (look it up). Managing a dozen properties is enough to keep me busy, even when travelling abroad.
    We build a few houses each year… five last year. The reason I “know Australia” pretty well is that I’ve lived here probably twice as long as you have. My friends share our interest in property.

    And finally, if you’re concerned you may go down for a $200K housing debt, you’re probably the fella described by our oriental(“) friend, Shoe-son… you know, the house, new car, big TV, new furniture, Bali trip, unplanned blessed event… . Pleased to learn you’ve upgraded to a “(real – not imaginary) wife” (Your post 16/02/2010). Those plastic valves are a real nuisance, aren’t they?!~

    Reply
  48. I don’t feel like I’ve been bitten by my past at all Biker. I feel as though you are losing relevance with every post. Plastic valves? I don’t understand. This is just lame now. I see your realing scratching for comebacks if your googling my tag digging for dirt. For someone with all that wealth why would you waste so much time on the “slimy” likes of me. For the record my household has no debts other than our mortgage. I worked in a financial institution for six years doing loans, cashier work and I.T. – I know of the evils of harvey norman, credit cards, car yard finance etc. Have you ever had to borrow money Biker?

    Reply
  49. You’re not a bloody Kanuk are you Biker? Jeez, have I got some “dead leaf” jokes for you! :)

    Reply
  50. Claytonator: “I see your realing (sic) scratching for comebacks if your (sic) googling my tag digging for dirt.” Nah, I suddenly remembered that the Yanks had manufactured a landmine under that patent… and wondered if you might be going to blow up.

    I’ll help you here: “Pleased to learn you’ve upgraded to a “(real – not imaginary) wife” (Your post 16/02/2010). Those plastic valves are a real nuisance, aren’t they?!~” Blow up… get it? Nah? OK. You sure someone actually employed you? Loans? Finance? IT?! No wonder there’s a GFC out there! M-a-t-e… .

    Borrow money?! Let’s put it this way. If you think $200K is a debt, you really _do not have a clue._ But since you’re keen to spill it all, son…
    and you’re not backward in demanding _my_ vocational and financial details,
    just how much _super_ do you have? Do you have two, five and ten-year-plans? What percentage of your income is invested? 95%? How much tax do you pay? Do you pay _any_ tax?!~

    Ned, I’m one of us, mate. Found a beautiful young Canuck 34 years ago… and I’m living a life I couldn’t invent. Will get over to QLD once I’ve pulled the Super. Need to finish this latest project, first… .

    Reply
  51. “Ned, I’m one of us, mate. Found a beautiful young Canuck 34 years ago…” … Gawd please bless you – Like hey, Vancouver’s great – But if I had to start pretending it was the best city in the world, I’d need a bit of warning is all!!! :)

    Reply
  52. Vancouver? _One_ of our favourite cities. When our son begins his post- doctoral research, he’ll be the fourth generation of our family to study there.

    I could list a dozen great cities I could live in, Ned. Returned after six months just a little disappointed that we still don’t have a NH base. The problem is that we found _nothing_ in six months comparable in value to Oz.
    We’ll just keep building here.

    We had a ball at Whistler, where friends have the ultimate chalet a hundred metres from the Gates’ place. But we also spent time at Blackcomb and Mt Washington, where our kids snowboard, when they’re not hitting the NZ slopes.

    In one sense, Clay is correct. Why _do_ I bother to respond to his stuff? Dunno. On a site where every blogger insists he knows more about property than I do, is better qualified, more experienced, and wealthier than I am, why do I _bother_ to rattle bear cages? It’s probably the ludicrous predictions. I get drawn in by the geniuses who announce that in “1-2; 4-6; 12-18 months” queues will form to sell them 40%-discounted houses.
    I see the retractions have already begun… .

    Reply
  53. OK. I’ve just had an epitomy. Today I’m going down to the soup kitchen to laugh at people less fortunate than myself. I’m gonna wave money in their face and tell them that if they were as smart as me they wouldn’t be where they are. I want to be just like Biker Pete. Biker you are now my hero. Seeing as you never stuck the bayonnet into my throat I am forever indebted to you and have decided to follow and support your cause. I will be Robin and you can be Batman. I can already feel my ego rising as fast as my equity. This afternoon I’m going to install 40 sqaure metres of mirrors in my home so that I can bask in my own glory. It’s so wonderful knowing that I am the best. I’ll be stroking my Biker Pete shrine now, so please don’t bother me peasants.

    Reply
  54. It’s the anonymity of the internet of course and that is the real sad part in my view. For whatever reason (and I suspect it is mostly envy) you really rankle certain people on this site. They vehemently disagree with you about property and have absolute certainty that you will suffer 40% losses (or more) in time, although the actual time of arrival of such losses changes a bit. It would be great if this disagreement went along the lines of “Hey Biker, I think property values will drop because of blah blah blah” and things can go from there with . But no, it rapidly drops to the level of infantile abuse and vile insinuations. Justin gave me advice a few months ago to “just turn off” to such posts which is fair enough I guess however I cannot help but notice that over the last twelve months things have gone downhill rapidly with people wanting to actually post something interesting (Greg for example) having stopped a while ago. I am not blaming you Biker or Ned, from what I have read you have done your best to try and make light of the situation and try to find some humour or other slant to the more vicious of the posts against you. It is a shame and pretty sad considering what could be discussed.

    Now for those who want to disagree fine, but if you want to let forth with the usual dribble then don’t dirty this site. My email address is don_callanan@hotmail.com – do me a favour and send your rants there and I will do my best to respond as time permits.

    Reply
  55. This is ridiculous. I’ve been stigmatised as a Keen lover when really I’m a fence sitter. I’m not the bully here, and I’m not infantile either. Yes I am envious of Bikers fiscal wealth. I will take Justins advice and let Biker do his thing. Looks like you win Biker. On an economic note I hope for my sake property values don’t fall 40%; I can see reasons why it could and reasons why it won’t. I’ll continue to read the articles and a bit less of the commentary. I’m not apologising to anyone this time though.

    Reply
  56. Don: ” I am not blaming you Biker or Ned, from what I have read you have done your best to try and make light of the situation and try to find some humour or other slant to the more vicious of the posts against you.”

    What rubbish. You obviously don’t read fraudster Biker or Ned’s posts. They are like two children who resort to name-calling.

    I have very rarely seen anyone get upset with each other on this website, apart from with these two. Biker and Ned are the common denominators. It is not “everyone else’s fault”.

    Claytonator:
    You can’t win an argument with children like fraudster Biker and Ned. They need a good smack is all (and probably need to get off the smack too). But this is the internet, where trolls like Biker’s and Ned’s proliferate like a cancer and infect healthy websites like this one.

    Fortunately, they are geriatrics at the beginnings of dementia and the world doesn’t have to put up with them for that much longer.

    Reply
  57. If it’s my stockmarket advice, then I should clarify; you need to keep a close eye on the RBA’s open market activities, my research tells me they are the market makers.

    They seem to be presently trying to be somewhat prudent, but I still think they will have no choice but to ‘make’ the market. You can’t make the junkie go cold turkey without him suffering withdrawal symptoms. In fact, he’s been fed his drugs so long now he can’t live without them.

    An analogy is the current Greek government debt problem, I read the trouble began when the ECB been indicating it would be increasing the collateral requirements for Euro loans ie. the ECB is, at least trying, to be ‘prudent’. Unfortunately for Greek government debt, it is rated below the indicated requirements.

    Reply
  58. For perusal, if we take time to post we can either be interested in improving quality and reach or else be interested in lessening it

    http://www.alexa.com/siteinfo/www.dailyreckoning.com.au?p=tgraph&r=home_home

    Reply
  59. Claytonator – Let’s get ONE thing straight – About you being “stigmatised as a Keen lover” – IF you are referring to my comment where I said:

    “Claytonator, if you don’t see it as being in any way personal to ask, just how exactly DID you get so clued up on the habits of “child porn addicts and paedophiles”? – From one of those in depth academic analyses like what Steve Keen dun on Oz house prices I certainly do BOTH assume AND hope!!!” And ended the comment with “Cheers mate!; And a smiley face.

    I would have thought a reasonable interpretation of that comment, is that I suggested your knowledge of the habits of child porn addicts and paedophiles may well be academic (rather than practical) – In a similar fashion to the way that Steve Keen’s knowledge of Oz housing prices may well be academic (rather than practical).

    And no more to be interpreted as identifying you as a Steve Keen lover, than if I had used the example that Ben Bernanke’s knowledge of the Great Depression is academic, could or would identify you as being a Ben Bernanke fan.

    Although certainly, when talking about academic opinions on Oz house prices, Steve Keen is the obvious example to use. Rather than Ben Bernanke.

    I guess the real point is if I had said “Claytonator, if you don’t see it as being in any way personal to ask, just how exactly DID you get so clued up on the habits of “child porn addicts and paedophiles”? – From one of those in depth academic analyses like what Ben Bernanke dun on the Great Depression I certainly do BOTH assume AND hope!!!” – Surely you wouldn’t have taken that as having “stigmatise”d you as a Ben Bernanke fan – I wouldn’t have thought anyway?

    Not that I personally feel that anyone who sees value in Keen’s thoughts (as I have in the past and still do – with it being a matter of balancing them against other thoughts) has any “stigma” associatted with them. Except in so far as Keen himself is now going RIGHT over the top to turn the thing into a full on media circus – Which is even less useful than taking the solely academic approach that he previously did. IMO.

    Reply
  60. @Biscuit Peat

    You read the Bartefoot Investors column, did you perhaps read the barefoot forum when it was up…

    Back in November 2008 Scott put a thread up in the forum asking predictions for 2009..
    I had a crack and said the ASX will go 3000 (3142 was the low in 2009)
    6400 for the DOW (damn close on that on as well )
    Unemployment 9% or 10% I’ll take a plausable on that because as companies reduced employees hours rather than lay them off.. had the followed past thinking in downturn and laid people off that 9 or 10 percent was not an unreasonable guesstimate..
    Properties to reduce by around 30% and in quite a few suburbs in Melbourne they did… they have since recovered somewhat and so to has the market. For my efforts Scott Pape sent me a signed copy of his book…

    The high of 6800 to a low of 3200 (round figures for simplicity) was greater than a 50% drop in the ASX
    I think the market is heading for 2400 which is LESS than a 50% drop from current level, it is not an unreasonable theory to think that if it fell over 50% first time, the next correction does not have to be as severe to get it too my target level

    The world economy is still not self sustaining and is still very fragile a correction is possible.. I think more likely than not…

    Why do you care about my primary language? are you racist as well as ignorant?

    You think/hope I am wrong so you can stick your e-thumbs against your temple with your hands open and wriggle them while all the while saying nananana shoeson was wrong, shoeson was wrong nananana!!!

    I hope I am wrong because we will be in a pile of shit if I am not..

    Stillgotshoeson
    February 17, 2010
    Reply
  61. Ned, if only you had half of Steve Keen’s intellect, your posts might be worth reading.

    Reply
  62. Rory Robertson, on Keen (16/02/2010): “”Unfortunately, Dr Keen recklessly encouraged everyday Australians to sell their homes at what turned out to be the peak of the global financial crisis, and the trough in local house prices.”

    I suspect most of us have twice Keen’s intellect.

    Reply
  63. You just CAN’T help yourself can you Prozac “Pete” …

    “… Biker or Ned’s posts. They are like two children who resort to name-calling” … “Fortunately, they are geriatrics at the beginnings of dementia and the world doesn’t have to put up with them for that much longer.”

    Regarding Claytonator, I don’t have an “argument” with him so far as I’m aware. Although it did seem possible he may have made an inaccurate assumption about something I said. (Thus my post above – TO Claytonator :) )

    PS: As to my intellect, Well I guess we all have our little handicaps in life to be coped with hey? :) :) :)

    Reply
  64. I thought I was suspected of being Prozac.

    As for Steve Keen’s intellect I don’t believe anyone can question it. I would say his IQ would be off the chart. I also don’t believe you can question his motives, he’s not looking to make mega bucks from his research, his fundamental argument is this.

    Debt has to be repaid and too much debt can lead to a financial crisis (as we have seen around the world)and that we only have to look to the past to see the effects.

    His call on the fall in property prices may be premature or even wrong (highly unlikely in the medium term), but at least he has the intestinal fortitude to make his statements and face the music if his calls are incorrect.

    That’s why people such as me trust his judgement and look forward to him being shown to be correct, he is indeed unfortunate that his “40% fall” statement is used by his detractors to divert attention from Australia’s debt addiction.

    Reply
  65. “Keen recklessly encouraged everyday Australians to sell their homes at what turned out to be the peak of the global financial crisis, and the trough in local house prices.”

    Well, you can understand why Pete’s bitter. Sold in a trough… and now he can’t get back into a home. I imagine a lot of potential FHBs were equally annoyed after declining the FHOGs… thinking prices would fall… missing out… then watching prices rise steadily. No wonder there’s such a degree of unresolved anger here. Why not dissipate some of it by going the whole two hundred yards, I mean kilometres? You can beat up anyone who tries to ask Keen the big question emblazoned across his T-shirt: “Ask me if I know the difference between ‘realty’ and ‘reality'”

    Reply
  66. Claytonator, 17/02/2010: “OK. I’ve just had an epitomy.”

    Ouch!

    What you mean is: “I’ve just had an intuitive grasp of reality through something simple and striking”

    An epiphany.

    Tip No. 2: If you attempt to impress with language you don’t understand that will _also_ come back to bite you.

    Reply
  67. Of course you may mean that, following an injection of anaesthetic, you’ve had a rush of consciousness about your changing condition?

    ‘epidural’, perhaps?

    Reply
  68. You cant argue with the data in keen’s charts here though
    http://www.youtube.com/watch?v=oHg5SJYRHA0
    the facts speak for themselves

    Reply
  69. Roy, when it comes to debt Australians are like little kids at a lollie shop
    If its there they just have to have it, they just can’t help themselves

    Reply
  70. Ross, re: the alexa rankings. Need to keep in mind that ADR has a newsletter which probably accounts for most of its daily (or weekly) readership. They are also spared a lot of the bickering in the comments us non-subscribers live with.

    Reply
  71. As with Bertie, Keen’s conclusion makes a lot of sense

    But Keen didn’t seem to get the timing right.

    Biker Pete, don’t be so sure about the mid / long term of Aus real estate market. People have to afford the houses for them to go up. Right now, the houses are simply off limits to average mid-income people.

    We’ll in a few years’ time. When it is the US’s term to enjoy the sovereign debt crisis, China / Asia will surely feel the heat. Australia will not escapte either.

    When the interest rate hits mid teens or higher, watch the house prices then… People will then discover it’s all a bubble built on paper money…

    Reply
  72. Justin: “You can’t make the junkie go cold turkey without him suffering withdrawal symptoms. In fact, he’s been fed his drugs so long now he can’t live without them.”

    I agree. That’s a pretty good description of our Prozak, Justin.
    Thanks for sharing… .

    Reply
  73. Dan, the site has a base even when you compare on alexa with highly cross promoted ones like business spectator; most Australian sites are either heavily moderated or have comments censored for political content, so-called libertarian sites are often anything but. We are lucky to have this one, and I put the alexa link up with no thought of criticising the reach of the site or the news letters. I don’t mind people going hard ball as long as there is substance but it should give the reader something. Social media operations by lobbies and states is also something to be watched. We are seeing alot of it now on The Economist site. The only way to guard on that is to have an expectation for a breadth of issues in someones commentary, sure they are going to be hooked up on their biggest investment if it is housing but in my mind I demand more of bright people.

    Reply
  74. “People have to afford the houses for them to go up.”

    And I assume that is a large part of the reason, that in QLD at least, the state government has recently taken, what would seem to be rather aggressive action, to support the supply of affordable housing:

    http://www.cabinet.qld.gov.au/MMS/StatementDisplaySingle.aspx?id=68416

    Reply
  75. Ned – i know the gold coast council introduced a ‘faster planning approval process’ that was designed to get a complying plan turned around in 7 days.

    the deal is that if there are no zoning impediments on the land (flood, landslide, whatever) then they’ll turn the plan around in a week.

    they then went and changed the high-tide/global warning zones to 20meters above the current high tide mark. i think there are about 3 blocks of land in the whole gold coast that would now not have any zoning issues and could get the 7 day turn around.

    Reply
  76. “Comment moderation policy: Port Phillip Publishing supports free speech and frank and open conversation. But we reserve the right modify or delete your comments if they contain foul language or violate Australia’s anti-discrimination laws.”

    So Biker… I guess we won’t be seeing any more posts from you :)

    Reply
  77. Fair comment, Ross and I agree. Hopefully we’ll see more quality over quantity in the near future *dream dream dream*

    Reply
  78. It’s the duplex thing that’s the biggy Matto – By the sounds at least, it pretty much means any block of residential land here can have duplexes built on it??? That would make a dent in any serviced land shortage issue here I reckon! :)

    The last I heard Brisbane City Council was NOT happy!

    http://www.brisbanetimes.com.au/queensland/queensland-property/councils-forced-to-take-developers-on-trust-lgaq-20100210-nsb3.html

    Reply
  79. you’d have to ask someone in the game ned but at a quick guess id say you’d still have to have multiple occupancy zoned land fopr duplexes to start with.

    Res B or whatever classification they use.

    Reply
  80. Perhaps Matto? I guess it is the following that piques my interest:

    “Under the new plan, “low impact” duplex developments – where two homes were built on one residential block – a developer could self assess their project against 22 categories.”

    If one of those 22 catagories says something like “The project shall satisfy all existing local council requirements for the development of a duplex”, then that bit of the legislation isn’t really very exciting at all. :( … :)

    Reply
  81. Fiscal Phil: “I thought I was suspected of being Prozak.”

    If one should happen to want some background on this really very uninteresting little side thingy that’s going on, this is the first time I recall the Monopoly Board getting tipped off the table:

    http://www.dailyreckoning.com.au/a-flawed-theory-on-how-to-manage-an-economy-during-a-recession/2009/10/13/

    It warmed up notch about October 15 I’d say? :)

    Back in those days “Pete” wasn’t “Prozak” – But he is now. Let’s just say it’s a loonnngggg story – With the original “Pete” no longer choosing to grace this site that I’m aware of.

    PS: The following also adds a bit of info for any relatively recent arrival who has a high tolerance level for pain:

    http://www.dailyreckoning.com.au/everything-was-looking-up-with-the-baby-boomers/2009/10/28/

    Reply
  82. “So Biker… I guess we won’t be seeing any more posts from you” :)

    Oh, good shot, Comrade Pete! ;)

    Reply
  83. I just got knocked over posting a comment – Where the only possible probs I could initially think of are that:

    (a) It came from me
    (b) It mentioned a blogger’s name starts with “P” and ends with either “k” or “c” depending on spelling, and
    (c) It contains two links to past DRA articles.

    So, testing, testing, is it me? :)

    Reply
  84. Not “me” – So testing, testing, is it prozak or prozac ?

    Reply
  85. Nope, not “prozak” or “prozac” either – So we are down to the possibilty of either of two of DRA’s own articles maybe?

    Links follow (again):

    http://www.dailyreckoning.com.au/a-flawed-theory-on-how-to-manage-an-economy-during-a-recession/2009/10/13/

    http://www.dailyreckoning.com.au/everything-was-looking-up-with-the-baby-boomers/2009/10/28/

    Reply
  86. Yep, that cooked it! The poor buggers aren’t even happy to allow links to their own articles (some of them anyway?) anymore – With the two I was after being Googleable under “a-flawed-theory-on-how-to-manage-an-economy-during-a-recession” and “everything-was-looking-up-with-the-baby-boomers” I imagine?

    This has gotten REALLY crook! :) :) :)

    Reply
  87. Maybe they don’t like links to anything right now – Due to a “procedural change” – so trying one from above that worked no probs:

    http://www.brisbanetimes.com.au/queensland/queensland-property/councils-forced-to-take-developers-on-trust-lgaq-20100210-nsb3.html

    Reply
  88. Yep, that got through … What a hoot!

    Reply
  89. Good luck, Ned. From time-to-time my stuff has been rejected (probably too close to the mark!) Surprised you got b*gger through. :)

    Interesting to see the latest comments from the RBA stating that rates are on hold due to irresponsible banks ‘amping’ the recommendations.

    Historically, Pill Boy has termed himself ‘Prozak’. The ‘k’ is possibly in deference to his hero… , ‘kayfer’… ;)

    Reply
  90. Another win! There are other potential problem possibilities a rigorous analyst one might be tempted to check I guess, but in the absence of testing them, all a non-analytical type like me feels to say is “Hmmm …” :)

    Reply
  91. We’ve REALLY got to stop chatting about him though Biker – I fully suspect that’s part of his “thing”? And Yes, it isn’t easy when he said what he did about your missus! And to at least some degree I can relate – I did sidestep his recent “kind” offer to chat about my mum over a beer – As you may have noticed? – And that’s worked out OK so far?

    Although Yep, there’s certainly been moments when I might have relished the prospect of getting the little prick alone behind the pub dunny for 30 seconds for a “quiet chat”! :) :) :)

    None of us can have ALL our heart’s desires in life I guess? :)

    Reply
  92. HaHa… right you are, mate! :)

    Reply
  93. This is getting weird. My previous posts ARE disappearing. With the last one to vanish being the one where I reckoned it might be because a mentioned a fellow blogger’s name starting with “P” – But determined that wasn’t the case.

    But now that comment is gone. Good! If DRA is on the job, that’s just fine and dandy by me! :)

    Reply
  94. Excellent article Dan – as always.
    The posts in response started off well enough – informative and insightful – but then decended into a trivial mud-slinging affair.
    I wonder whether Ned S and Biker Pete are really Rory Robertson and Peter Switzer (though not sure which way round)? It’s almost like they’re engaged in some kind of virtual Aussie school playground mateship/mating ritual. All this ganging-up and egging-on. C’mon girls, please cut to the chase – swap your phone numbers – and take this love affair off-line.

    Reply
  95. Ah, but you ALWAYS automatically attract a ‘thumbs down’ and one ‘star’, Ned! ;)

    Reply
  96. Hmmm no response from biker on my post dated
    Comment by Stillgotshoeson on 17 February 2010:

    or on my “cashflow post” either…..

    Then again, I suppose it is hard to argue against the truth…

    Stillgotshoeson
    February 18, 2010
    Reply
  97. Sorry, Shoe-son… wasn’t aware you’d contributed further gems to the battle.
    Didn’t intend to leave you out in the forest, legless, bleating, waving your sword. :)

    I’ll find… and study your contributions… and get back to you.

    Reply
  98. Shoe-son: “You read the Bartefoot Investors column…”

    Not into the Simpsons, son… .

    Reply
  99. Comment by prozak on 15 October 2009:

    hahahaha… “biker” Pete. do you?

    Or did I just assume that because of neds wage that his super would be lower?

    At least we again confirmed that Biker Pete is an obnoxious moron.

    small time “biker” pete…. poor little man…. must try and continuously compare his penis size to others… and continuously found wanting…. poor poor “biker” pete.

    Perhaps since you are so “rich” you can buy an extension?

    Or is there little point since it doesn’t work anymore anyway?

    I guess it is hard struggling with two inadequacies at the same time. The wife must be terribly disappointed.

    Don’t worry Biker Pete. She probably has someone to service her whilst you pay the bills!

    Reply
  100. Not sure why all retards on this site are so keen to join me and Biker at the hip??? – He’s a bit bullish; I’m a bit bearish. May be because we refuse to despise each other perhaps?

    Reply
  101. OK, very impressive stuff, Shoe-son. You said:

    “I had a crack and said the ASX will go 3000 (3142 was the low in 2009)
    6400 for the DOW (damn close on that on as well ) Unemployment 9% or 10% I’ll take a plausable on that because as companies reduced employees hours rather than lay them off.. had the followed past thinking in downturn and laid people off that 9 or 10 percent was not an unreasonable guesstimate.. Properties to reduce by around 30% and in quite a few suburbs in Melbourne they did… they have since recovered somewhat and so to has the market. For my efforts Scott Pape sent me a signed copy of his book… ”

    Well, I’m sure you’re a clever lad… and I _know_ you wanted me to see that… and I’m sorry I missed it first time. I’m sure you _made_ hundreds of thousands, by backing your hunches(?) Guesses are fine… but do you ever back these hunches with _real money_? For example, did you _buy_ a Melbourne property at 30% off? Did you sell at 6200 and buy back in at 3200? (We got THAT one right! :) ) Did you have a conniption when unemployment fell to roughly half your guess(?) Finally, did you _sell_ the book before the guru’s magic faded, as his own predictions waned?
    Barefoot Investor?! Now I understand your tag. You figure you’re even smarter than him, Stillgotshoeson… . ;)

    Reply
  102. Prozak: “Don’t worry Biker Pete. She probably has someone to service her whilst you pay the bills!”

    Fairly typical of a bloke whose thing no longer works and hopes others have the same problem. :) Get off the fluox and see if you can sort out your erection issues, ‘Zak… That stuff can’t help, but maybe once you cease medication, you’ll be able to find a partner and overcome your obvious envy…

    Reply
  103. Shoes – Above on 16 Feb I commented to Claytonator ($200k mortgage and a bit concerned about RBA rate hitting 9% without significant wage increases):

    “And for what little value it may or may not be, I can’t see the RBA rate getting to the sorts of levels that you indicate could cause you concern anytime soon at all. BUT even IF they did, they’ll just be there for a fairly brief time to slam inflation back into its box. During which someone in your situation goes chunna, chunna and accepts that the bank wracked a bit up against them to be repaid later. If you get my drift?”

    Perhaps the comment could be of some use to you? Although not especially I guess. Given that you’ve already said you don’t want to buy a house and are quite OK with doing what you are doing for now.

    Reply
  104. Yeh, re my regurgitating just one of Prozak’s many past little verbal treasures for public consumption, the point is Andrew, that if you don’t know squat about what you are talking about (history wise at least), them you might be wise to shut your yap until you do??? And, in that regard, I just helped inform you a bit perhaps?

    Reply
  105. Andrew: “I wonder whether Ned S and Biker Pete are really Rory Robertson and Peter Switzer…”

    And I wonder if ‘Andrew’ is another d*ckless Prozak clone? ;)

    Reply
  106. Are you and Biker going insane Ned?

    Talking to imaginary friends now?

    Two tin-foil hats for the special ones please!

    Reply
  107. Hmmm … Nice quiet nite Biker. No-one else seems to have had a lot to say over the last hour. So how’s it going with you and yours?

    Things are good here. Although my mob’s pipes are still frizzed up at home. No running water – But they buy what they need to drink/cook and head off for a paid cleansing ritual once a week. That’s OK – It happens. No big deal.

    And me ma ‘n pa are good too – Reckon life’s never been better in fact. Retirement on the pension in Oz with maybe $65k in super still to run down in their 70’s seems to be working out OK for them. Certainly helps that they have no debts or especially expensive habits I guess?

    Yep, all’s good in the land of Oz I reckon mate – Relatively; And even absolutely? :)

    Reply
  108. NAB: “Business confidence highest in fifteen years…”

    Pete, your dreams of Depression in Australia fade daily. We understand your anger and disappointment. Your dreams of a disabled Australia are fading fast, son. No McMansions for you, but your old bedsit awaits… .

    You don’t need a tinfoil hat. You need a _ticket back to the UK,_ son.
    They _need_ positive, happy people, Pete… . ;)

    Reply
  109. On that note DRA’ers, no more comments from me.

    I’m starting to feel sorry for these old fellas and their battle with cognitive dissonance.

    Back to the regular schedule of the Ned n’ Biker show :)

    Reply
  110. Oh, I see Prozak “Pete” is back? I do believe I’ll call it quits then – Nice chatting Biker … Munyana mabye? :)

    Reply
  111. Just remember folks – You saw it here! An example of Prozak “Pete’s” past wit at work before he PROMISED to depart … Yeh, yeh, yeh – :) :

    “Comment by prozak on 15 October 2009:

    hahahaha… “biker” Pete. do you?

    Or did I just assume that because of neds wage that his super would be lower?

    At least we again confirmed that Biker Pete is an obnoxious moron.

    small time “biker” pete…. poor little man…. must try and continuously compare his penis size to others… and continuously found wanting…. poor poor “biker” pete.

    Perhaps since you are so “rich” you can buy an extension?

    Or is there little point since it doesn’t work anymore anyway?

    I guess it is hard struggling with two inadequacies at the same time. The wife must be terribly disappointed.

    Don’t worry Biker Pete. She probably has someone to service her whilst you pay the bills!”

    Reply
  112. All’s well here, Ned. Busy day. (Flies are bad, eh?! ;) )

    Have to agree, mate. We’re still The Lucky Country.

    Feel a little for some of the unlucky blighters here, but I note that every attempt you’ve made to assist some of these sad, sorry folk has been angrily rebuffed… . Thought some of Matto’s, Dan’s and Don’s suggestions were A1, too; but I see they got short-shrift from the ‘Oz-Must-Die!’ nazis… . No longer bother to provide free advice… ! :)

    So how are your plans? Our builder is about to quote on a home identical to one we’ve almost completed. It has come in on budget and friends who have done the walk-through like it; so we figure ‘let’s do it again’ about one km from that lake site. Figure that after building the last few, this company will reward our loyalty… .

    Reply
  113. Pete: “On that note DRA’ers, no more comments from me.”

    And that’s when you know you hit a vital nerve, folks… .

    “Pete, your dreams of Depression in Australia fade daily. We understand your anger and disappointment. Your dreams of a disabled Australia are fading fast, son. No McMansions for you, but your old bedsit awaits… . You need a _ticket back to the UK,_ son.”

    Don’t just leave the site, Pete. Leave this ‘hole’ you hate so much.
    Nothing for you here, son. We need workers, positive blokes with _guts_.
    If Australia had a gate, it should have a large sign: “Whingers Not Wanted, Thanks!!”

    Reply
  114. “No longer bother to provide free advice… !”

    I’d noticed that Biker :) – And most especially when you are “barked” at nowadays I suspect?

    Hey, just because a bloke has an opinion based on a lot of experience doesn’t necessarily mean he’s going to rush to say “Here is everything I know and believe and precisely WHY in umpteenth detail on a platter” … When he IS being told “I’ve read lots of news reports and financial opinions and done some spreadsheet calcs and decided to tell you you’re a dill to your face!” (As well as how hated you are; And how greedy; And how evil … Albeit, that is more possibly the “general” input of “others” regularly!) :)

    I’ve got no idea if we are going to have a “Great Depression II” … Very much doubt it? Suspect that in a WORST case scenario it more likely sounds like the “Great Disappointment Repeated Regularly I” ? :)

    But with an alternative possibility definitely being Yeehah, Asia’s off to the races!!! And either way, I figure that Oz is about as good as it gets regardless.

    My plans … I’ve been doing some calcs. Much of a muchness as to whether I sit on my cash or convert same to property – Given that I hold same land already – So my situation is quite different to a FHB for example. Spoke to my accountant today. Lots and lots of options it seems. We’ve agreed to get together after the KHR release and have a good long chat. Although his opinion was that it (the KHR) probably won’t make a huge impact?

    Reply
  115. @Ned S
    “Shoes – Above on 16 Feb I commented to Claytonator ($200k mortgage and a bit concerned about RBA rate hitting 9% without significant wage increases):”

    RBA rates probably won’t get that high but mortgage rates will…
    I believe double digit mortgage rates are a possibility… the only reason they won’t is if the world takes a backward step..

    Stillgotshoeson
    February 19, 2010
    Reply
  116. Oh dear – Steve Keen has given himself a 15 year time frame now for houses to drop by 40% “from their peak”.

    http://www.smh.com.au/opinion/society-and-culture/walking-on-a-wire-stretched-between-stimulus-and-debt-20100218-oiqh.html

    Money quote: “Keen was so convinced in late 2008 that prices were about to fall precipitously, he sold his house and moved to a nearby rental, only to watch prices climb more than 10 per cent last year. Keen insists that in 15 years, he’ll have been proved correct.”

    In 15 years I will be a millionaire, married to a supermodel and will be playing gold on the moon so there! Hey this prediction thing is dead easy!! (note that my time frame may change without notice)

    Reply
  117. Sort of resembles a denial of service attack on DRA doesn’t it? So many meaningless comments to sift through. If I had as much time as Biker and Ned I would count how many posts they lodged yesterday as opposed to normal people’s posts. What do we do though? So pitiful. Good posters dissappearing daily to make way for Ned and Bikers skype style dribble.

    Reply
  118. Claytonator’s comments to date on this article follow – Ta mate – All totally professional and undeniable value adds as always! :) And Yes, your heartfelt concern that I might have more time to talk shite than even you do is noted … :) :) :) So bearing it in mind, I’ll sneak in a comment to Biker re his tag having been pinched at the end.

    *****************************************************************

    Comment by Claytonator on 16 February 2010:

    I read the DR, say 5 times a week. It’s fantastic – have been doing so since 2005. Sadly, around a year or so ago – Tricycle Pete showed up. It’s hard for Biker Pete to listen to what other people have to say. I think it may have something to do with the fact that he often forgets to take his helmet off. Secretly – I think he chooses to leave it on to save black eyes and broken jaws in public. Seems to know alot about Australia – although there are alot of pretty pictures available on the internet; particularly when the internet is your life and the only way you can get people to talk to you…. Your M.I.L. doesn’t count as a friend either.

    *****************************************************************

    Comment by Claytonator on 16 February 2010:

    I can’t believe your still licking those festy old wounds? To be honest I can’t even recall any of your lame comebacks. I work full time and my (real – not imaginary) wife works part time. We owe around $200k on a property we bought in 2005. I wouldn’t exactly call myself a bear, although I do have concerns. I’m fairly confident that I will weather the storm (if there is one). I guess though if the RBA cash rate hits something like 9% and wages are still stagnant I might have a problem. If I do, a whole heap of other battlers will be in the shit too.
    By the way, you never did answer my question as to whether you have EVER worked under someone? I’d appreciate some explanation here because you seem to have the arrogance of someone who has never had to answer to anyone.

    *****************************************************************

    Comment by Claytonator on 16 February 2010:

    Just to clarify for our new readers’ sake there was no allegations of paedophilia on my behalf. Postman Pete used to specify his location when posting and it would differ from post to post, sometimes several times in one day. I simply suggested that he was a transient internet cafe hopper unless his bike has wireless roaming broadband which I doubt. I merely suggested there was a correlation between his habits and that of paedophiles. Since then Postman Pete no longer posts his location. Biker is renowned for taking people’s words out of context and avoiding questions such as have you ever worked for a wage Pete? Still waiting for an answer…..
    Egotistical, narcisistic waste of air.
    You have no legacy to leave behind Postman. The state will take your wealth when you die because you have noone to bequeath your fortune to. Why have children? They could never come close to your depth of intellect.. You would always consider them parasites waiting for their inheritance. That’s what you did, so why wouldn’t they?

    *****************************************************************

    Comment by Claytonator on 16 February 2010:

    Biker says:
    “Needs work, Prozak. I’d advise you not to leave your day job, but I see you’re still shaking hands with the unemployed… .”

    Are you employed by anyone Biker?

    *****************************************************************

    Comment by Claytonator on 16 February 2010:

    Ned, the top bit is a bit convoluted. Lets keep things in context in future. Those that follow the link from your previous post and read the entire battle will judge for themselves. I don’t recall siding with Steve Keen directly in any of my posts either..
    Now – I am not offended by your personal question and am not treating it as an allegation either. So here is my explanation – basically anyone with a bit of networking knowledge would understand that by WAR driving or using Internet cafes you cannot be directly identified by your IP address. This means illegal internet activity cannot be traced to you – unless of course that cafe has CCTV cameras or ID required for use etc. Pretty straight forward really. Of course there are other ways also – proxies, IP scrambling software etc but generally ISPs are aware of these and have countermeasures in place. Ask your kids if this doesn’t make sense to you.

    *****************************************************************

    Comment by Claytonator on 16 February 2010:

    Biker – can you enlighten me as to where my apology was retracted?

    Are you unemployed?

    *****************************************************************

    Comment by Claytonator on 16 February 2010:

    I don’t feel like I’ve been bitten by my past at all Biker. I feel as though you are losing relevance with every post. Plastic valves? I don’t understand. This is just lame now. I see your realing scratching for comebacks if your googling my tag digging for dirt. For someone with all that wealth why would you waste so much time on the “slimy” likes of me. For the record my household has no debts other than our mortgage. I worked in a financial institution for six years doing loans, cashier work and I.T. – I know of the evils of harvey norman, credit cards, car yard finance etc. Have you ever had to borrow money Biker?

    *****************************************************************

    Comment by Claytonator on 17 February 2010:

    OK. I’ve just had an epitomy. Today I’m going down to the soup kitchen to laugh at people less fortunate than myself. I’m gonna wave money in their face and tell them that if they were as smart as me they wouldn’t be where they are. I want to be just like Biker Pete. Biker you are now my hero. Seeing as you never stuck the bayonnet into my throat I am forever indebted to you and have decided to follow and support your cause. I will be Robin and you can be Batman. I can already feel my ego rising as fast as my equity. This afternoon I’m going to install 40 sqaure metres of mirrors in my home so that I can bask in my own glory. It’s so wonderful knowing that I am the best. I’ll be stroking my Biker Pete shrine now, so please don’t bother me peasants.

    *****************************************************************

    Comment by Claytonator on 17 February 2010:

    This is ridiculous. I’ve been stigmatised as a Keen lover when really I’m a fence sitter. I’m not the bully here, and I’m not infantile either. Yes I am envious of Bikers fiscal wealth. I will take Justins advice and let Biker do his thing. Looks like you win Biker. On an economic note I hope for my sake property values don’t fall 40%; I can see reasons why it could and reasons why it won’t. I’ll continue to read the articles and a bit less of the commentary. I’m not apologising to anyone this time though.

    *****************************************************************

    Comment by Claytonator on 19 February 2010:

    Sort of resembles a denial of service attack on DRA doesn’t it? So many meaningless comments to sift through. If I had as much time as Biker and Ned I would count how many posts they lodged yesterday as opposed to normal people’s posts. What do we do though? So pitiful. Good posters dissappearing daily to make way for Ned and Bikers skype style dribble.

    *****************************************************************

    Biker – I just noticed following:

    “Comment by Biker Pete on 16 February 2010:

    Whose side are you on Ned?”

    Definitely doesn’t sound at ALL like you! :) So our foreign connection is setting himself up for a bit more mischief methinks?

    Reply
  119. Ned: “I figure that Oz is about as good as it gets regardless.”
    Agreed.

    Ned: “Lots and lots of options it seems.”
    The ideal situation, Ned.

    Shoe-son:”I believe double digit mortgage rates are a possibility…”
    That’s why ‘lots of options’ is the way to go.
    Offsets are the answer. Freebie! :)

    Claytonator: “I would count how many posts they lodged yesterday..”
    Hadn’t made a single comment until after 5:00 pm WST, when the Black Knight
    shouted “Come back and fight, you b*stard…!!!” then bled all over me… .

    Reply
  120. “Whose side are you on Ned?”

    Not my comment, Ned. The old ‘divide & conquer’ tactic… another failed strategy tried by he who must be medicated.

    From time-to-time we’ll expect these mischief posts. Can’t use his own tag, which is besmirched and tattered after his low shots related to our female family members. Doesn’t enhance his claims to superior culture much… ;)

    Reply

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