Potential Big GFC Discussion Thread

[blueoval]

In my opinion, I think buying silver or gold is higher than cash. I have nothing to back that up but I have a distinct feeling about it. With the threat of a cashless society looming among the conversations on the news, it may possibly be the only way governments maintain control.

[GTP owner]

Depression no, recession yes. So people may have to let their second or third car go, and their internet connection, and their mobile phone, and austar subscription, and magazine subscriptions, and eating at nice restuarants, and buying everything new, or not replacing their huge plasma TV when it blows up....so what? It's just things. It is highly unlikely we will struggle to put food on the table. People really don't know how lucky we are. Those that complain and beg for food handouts rarely give up their fags, grog and pokies. Maybe we all need a reality check to focus on living within our means. A recession will be good for us.

[mr smith]

Originally Posted by GTP owner

. A recession will be good for us.

Mate, I couldnt agree more. Times up for dodgy over paid tradies and business that have taken their customers for granted over the last decade. The good players will be fine and their customer support will now pay off (they may even make some gains, as the rouges go bust).

[SEZ213]

Originally Posted by mr smith

Mate, I couldnt agree more. Times up for dodgy over paid tradies and business that have taken their customers for granted over the last decade. The good players will be fine and their customer support will now pay off (they may even make some gains, as the rouges go bust).

What dodgy trades are you talking about? More importantly what state?

Gross generalisations are generally what gets people into trouble...particularly when it comes to the suggestion that tradies are over paid...

As for a depression...it's probably well past due - I concur with the sentiment that it may lead people to understand that they don't 'need' all that crap, that the over-inflation that has occurred, particularly over the last decade or so, is a false economy...the money isn't real...

[GT]

Originally Posted by Sezzy

What dodgy trades are you talking about? More importantly what state?

Gross generalisations are generally what gets people into trouble...particularly when it comes to the suggestion that tradies are over paid...

Deliberately baiting people is what gets people into trouble! Please read the new sticky thread in this Forum for a guide to acceptable posting. Zero tolerance from this day forward!

Gaela

[GTP owner]

Originally Posted by GT

Deliberately baiting people is what gets people into trouble! Please read the new sticky thread in this Forum for a guide to acceptable posting. Zero tolerance from this day forward!

Gaela

Ouch!

By the way - which sticky thread?

[FPV+fteT3]

The company I work for are preparing for the worst we recently sold a parcel of land at Noosa for @14mil. just to be cashed up ready and to remain in the manufacturing game. The property development side of the business is virtually on ice at the moment we currently have an estate in Brisbane suburbs with 21 home and land packages we developed and have only sold 7 in 12 months. We are prepared to buy companies that would be good add ons for our manufacturing business as the money gets tighter and things start to go pear shaped for those not so well prepared. I guess we are at an advantage that our owner is 76 and has seen it all before and is in a position to shore up our position before it's too late.

I manage 3 of our companies in Newcastle and the majority of the meetings of late are about poor sales figures and where we (australia) are heading now and where we as a group will be 3-5 years down the track. We have bought another business only 4 months ago and have fixed it by being properly capitalised many other small businesses are falling into the same hole call it a recession or whatever it all spells a hard time ahead for all of us.

[JACK250]

Originally Posted by GTP owner

Depression no, recession yes. So people may have to let their second or third car go, and their internet connection, and their mobile phone, and austar subscription, and magazine subscriptions, and eating at nice restuarants, and buying everything new, or not replacing their huge plasma TV when it blows up....so what? It's just things. It is highly unlikely we will struggle to put food on the table. People really don't know how lucky we are. Those that complain and beg for food handouts rarely give up their fags, grog and pokies. Maybe we all need a reality check to focus on living within our means. A recession will be good for us.

Funnily enough last time things were looking bad the government stimulus money went towards exactly that...

[Paxton]

Originally Posted by JACK250

Funnily enough last time things were looking bad the government stimulus money went towards exactly that...

There is no stimulus money to be thrown around this time. Australia is in deeper trouble than Swan, or Gillard would have us believe. If there is no money globally, building will slow, lessening the need on our greatest export (and money spinner). I don't think our economy, weakened by a high Australian Dollar, is going to have the same buoyancy that it did with the $900 cheques, the Memorial School Halls, or the subsidised House Fires.

I'm worried. My portfolio was never for the short term, but I'm exposed to some losses at the moment, and I just hope that my spare cash can cover me should either of us lose our jobs. The house won't pay itself off...

[superyob]

Originally Posted by GTP owner

Depression no, recession yes. So people may have to let their second or third car go, and their internet connection, and their mobile phone, and austar subscription, and magazine subscriptions, and eating at nice restuarants, and buying everything new, or not replacing their huge plasma TV when it blows up....so what? It's just things. It is highly unlikely we will struggle to put food on the table. People really don't know how lucky we are. Those that complain and beg for food handouts rarely give up their fags, grog and pokies. Maybe we all need a reality check to focus on living within our means. A recession will be good for us.

A very good observation. I totally agree.

[GhiaEB]

As someone who is looking at getting my first house, I am very worried about it. I've factored in a 2% rate rise into my affordability but if it goes higher I could be in a spot of bother.

Add to it a loss in value (if the housing market drops) and I'll be in real trouble. I might just wait another 6months. I'll have a bigger deposit as a bonus.

Cheers

[GTP owner]

Originally Posted by GhiaEB

As someone who is looking at getting my first house, I am very worried about it. I've factored in a 2% rate rise into my affordability but if it goes higher I could be in a spot of bother.

Add to it a loss in value (if the housing market drops) and I'll be in real trouble. I might just wait another 6months. I'll have a bigger deposit as a bonus.

Cheers

This is why it is all going so wrong. You need to remember rates were at 17% in the early eighties (albeit for a short period of time) during the Paul Keating recession. We budgeted on max rates of 10% when we bought our home 12 years ago. We paid it off in 8 years, and had a deposit of 25%. If I were you, I would budget on 12% rates, and I would want at least 20% deposit.
Think of it this way... what if you or your partner lost your job - you would probably need to sell the house. If you borrowed 90% of the value, and the property prices drop by 10%, then you are in big strife. You will be forced to sell on a depressed market, pay the realestate thief, pay out the bank, and go broke. If you have a buffer, then if the brown stuff hits the fan you have some wriggle room.
And when you do buy your home, don't forget that everything costs. Rates, insurance, plumbing repairs etc. Then you will probably want to change a few things (new shed, paved walkwaqy etc), and fill you new home with new lounges, plasma TV etc. So, I would suggest you really need more than a 2% buffer....

[FTe342]

Originally Posted by GhiaEB

As someone who is looking at getting my first house, I am very worried about it. I've factored in a 2% rate rise into my affordability but if it goes higher I could be in a spot of bother.

Add to it a loss in value (if the housing market drops) and I'll be in real trouble. I might just wait another 6months. I'll have a bigger deposit as a bonus.

Cheers

Good strategy. But you won't have to worry about rates going up. They are about to head south. When banks calculate your borrowing capacity they have a margin of about 1.5% factored in but you should work out whats comfortable for you.

[GTP owner]

Originally Posted by FTe342

Good strategy. But you won't have to worry about rates going up. They are about to head south. When banks calculate your borrowing capacity they have a margin of about 1.5% factored in but you should work out whats comfortable for you.

Placing bets on which way the interest rates, local market, global market is just like any other form of betting. The experts have LESS than average (50/50) chance of predicting these things well. This strategy has very little to recommend it when you are looking to provide a margin of safety for yourself, your home, your family, and ensuring there is food on the table when things go bad.
As for the banks having their margin of safety - they are far more cautious now, but they all had to be bundled out in the sub-prime crisis. They don't care if you lose your house, they just want to make money out of you. One way to ensure you remain on top is to not give them that opportunity.

Just as a slight aside, given house prices are falling at the moment (2% over the last 12 months), I would be happy to wait longer until things are looking more rosy. We are looking to invest in our first investment property, and have a substantial deposit sitting in a cash account right now. Buit there is no way we are spending it. Better to earn interest and wait to see how far down the realestate market goes down.

[FTe342]

Originally Posted by GTP owner

Placing bets on which way the interest rates, local market, global market is just like any other form of betting. The experts have LESS than average (50/50) chance of predicting these things well. This strategy has very little to recommend it when you are looking to provide a margin of safety for yourself, your home, your family, and ensuring there is food on the table when things go bad.

Just as a slight aside, given house prices are falling at the moment (2% over the last 12 months), I would be happy to wait longer until things are looking more rosy. We are looking to invest in our first investment property, and have a substantial deposit sitting in a cash account right now. Buit there is no way we are spending it. Better to earn interest and wait to see how far down the realestate market goes down.

That's why I said its best to work out what is comfortable for you

Really? Do tell us which Australian banks had to be bailed out in the sub-prime crisis. What happened in the USA didn't happen here!

Since the Uniform Consumer Credit Code (UCCC) was introduced many moons ago banks have always had a margin of 1.5 to 2% added to the actual loan rate of their borrowing calculators for determing borrowing capacity. Debt Serice Ratio (DSR) is only one of a number of factors they consider however. True, general lending policy has been tightened since GFC.

[atec77]

Originally Posted by GhiaEB

As someone who is looking at getting my first house, I am very worried about it. I've factored in a 2% rate rise into my affordability but if it goes higher I could be in a spot of bother.

Add to it a loss in value (if the housing market drops) and I'll be in real trouble. I might just wait another 6months. I'll have a bigger deposit as a bonus.

Cheers

2% wont be enough , I lived through 17.8% and nearly lost everything we had worked for

[FTe342]

Originally Posted by atec77

2% wont be enough , I lived through 17.8% and nearly lost everything we had worked for

Different era and different circumstances. This isn't a Keating Banana Republic recession we have to have we are talking about here.

Ever heard of fixed rates? They weren't available for H/L until after the rate hike you mentioned, but have been ever since.

Why anybody worries about having to pay even 10% these days is beyond me. If variable rate moved up quickly even 2% from the 6.9% you can get almost anywhere at present, why the hell wouldn't any borrower fix all or most of their mtg before it got to say, 9%.

[GhiaEB]

Originally Posted by atec77

2% wont be enough , I lived through 17.8% and nearly lost everything we had worked for

We've been saving for along time. I've just factored in a 2% rate rise to maintain our standard of living. We could go beyond that but it will mean we will have to drop our standards.

If it ever went to 17.8% again I think you'll find the housing market would crash. Hell, people might have to sell their investment homes and housing might just become affordable again.

[T3ts50]

Originally Posted by GhiaEB

We've been saving for along time. I've just factored in a 2% rate rise to maintain our standard of living. We could go beyond that but it will mean we will have to drop our standards.

If it ever went to 17.8% again I think you'll find the housing market would crash. Hell, people might have to sell their investment homes and housing might just become affordable again.

Its good to hear you have factored in that extra 2%.

As a banker, we usually set a benchmark rate for assessing new loans, which is just over the 2% mark.

[creative]

Now is a very good time to invest..but look for dual ocupancy properties. My boss has just purchased 3 houses, renovated them and is getting an average return of between 15 - 22%! National average is 4 - 6%. He intends to have approx 100 properties before the market turns.

[Yellow_Festiva]

Originally Posted by creative

Now is a very good time to invest..but look for dual ocupancy properties. My boss has just purchased 3 houses, renovated them and is getting an average return of between 15 - 22%! National average is 4 - 6%. He intends to have approx 100 properties before the market turns.

That is an outstanding return! A lot of these opportunities were around in the late 90's prior to the boom. Perhaps we will see similar opportunities again?

[Scott]

Originally Posted by Yellow_Festiva

That is an outstanding return! A lot of these opportunities were around in the late 90's prior to the boom. Perhaps we will see similar opportunities again?

Wouldn't that be nice!

House prices may go down, they may go sideways, they may even maintain their current value. But with all of that in mind, I can't see a compelling reason to rush to buy at present.

If you have the cash on hand to drop as a nice sized deposit, I'd be putting it in a term deposit and sleeping easy knowing I have plans a, b and c lined up if I need them.

[Bent8]

The recent news about the US defaulting on it's debt is a smoke screen, as long as people rely on the news to keep them informed, these guys can just keep scamming us with all sorts of "excuses".

The US Federal Reserve was setup in 1913 on "Jekyll Island" by a bunch of bankers who most of them, still to this day remain unnamed.

Their system works by printing money as IOU's to this privately owned Federal Reserve bank and the income taxes of American's pay the "INTEREST ONLY" on this printed money!

A few years back if you went to a bank and deposited say $100, the bank was allowed to lend out 10 times this amount as loans ($1000), also known as "Fractional-Reserve Banking". Today these same banks can lend out around 20 - 30 times the original amount.

So in other words, the mortgage you have on your house was paid for by money created out of thin air (printed on a computer screen as available funds )

It's designed to collapse but the banksters want it to happen when they have their "solution" ready for you, and that solution is a One World currency.

Seems far-fetched and apparently they're behind schedule because people are waking up to their lies...

My guess is that Australia is currently about 6-9mths behind the US in terms of fiscal health but the gap is closing every day.

There are many doco's on this subject...

Secret of Oz is excellent
http://www.youtube.com/watch?v=6cq9yEVcGIU

Gerald Celente is a trends forecaster
http://www.youtube.com/watch?v=aRAvRtL0cz8

Be informed on what's really going on and you'll be fine.

[Elks]

Now I understand it all...


http://www.youtube.com/watch?v=NOzR3...layer_embedded

[Falc'man]

Originally Posted by Bent8

The recent news about the US defaulting on it's debt is a smoke screen, as long as people rely on the news to keep them informed, these guys can just keep scamming us with all sorts of "excuses".

The US Federal Reserve was setup in 1913 on "Jekyll Island" by a bunch of bankers who most of them, still to this day remain unnamed.

Their system works by printing money as IOU's to this privately owned Federal Reserve bank and the income taxes of American's pay the "INTEREST ONLY" on this printed money!

A few years back if you went to a bank and deposited say $100, the bank was allowed to lend out 10 times this amount as loans ($1000), also known as "Fractional-Reserve Banking". Today these same banks can lend out around 20 - 30 times the original amount.

So in other words, the mortgage you have on your house was paid for by money created out of thin air (printed on a computer screen as available funds )

It's designed to collapse but the banksters want it to happen when they have their "solution" ready for you, and that solution is a One World currency.

Seems far-fetched and apparently they're behind schedule because people are waking up to their lies...

My guess is that Australia is currently about 6-9mths behind the US in terms of fiscal health but the gap is closing every day.

There are many doco's on this subject...

Secret of Oz is excellent
http://www.youtube.com/watch?v=6cq9yEVcGIU

Gerald Celente is a trends forecaster
http://www.youtube.com/watch?v=aRAvRtL0cz8

Be informed on what's really going on and you'll be fine.

Good post.

One thing that Gerald says is that politicians lie. I can't understand that. He also said the governments only supports and represent the very rich. Baaa.. it can't be true... Baaa.

George Carlin.
http://www.youtube.com/watch?v=w0yhH...eature=related

[AMGC63]

One things for sure, if the media and people keep talking it up with doom and gloom and consumers start pulling in the purse strings as a result its sure to happen.
Consumer confidence dictates allot of this, a self forfilling prophesy i guess....

[Yellow_Festiva]

Originally Posted by Wayne351

One things for sure, if the media and people keep talking it up with doom and gloom and consumers start pulling in the purse strings as a result its sure to happen.
Consumer confidence dictates allot of this, a self forfilling prophesy i guess....

But the cause of this is easy credit IMO. If only easy credit wasn't available and real money from real purses was being spent then perhaps this would never have happened?

If we spend we are directly buggered, if we don't spend we are indirectly buggered.

[AMGC63]

Originally Posted by Yellow_Festiva

But the cause of this is easy credit IMO. If only easy credit wasn't available and real money from real purses was being spent then perhaps this would never have happened?

If we spend we are directly buggered, if we don't spend we are indirectly buggered.

If people change their regular sustainable spending habbits because of the henny penny banter were stuffed.

[Yellow_Festiva]

Originally Posted by Wayne351

If people change their regular sustainable spending habbits because of the henny penny banter were stuffed.

I agree, however the problem is highlighted right there.

[robjh80]

Problem? ... what problem? .. No, can't see a problem here

http://www.debtclock.com.au/

http://www.usdebtclock.org/

http://www.usdebtclock.org/world-debt-clock.html