Potential Big GFC Discussion Thread

[dave289]

Euro markets are copping a smashing right now . The link below shows world market data a short way down the page . I have just looked up the live german market and it appears they are down over 9% from yesterdays closing . Looks like another bad day for the US market which opens at 11.30 pm our time. Looks like another bad week is on the cards for the aussie market next week.

http://www.news.com.au/business/markets#share-market


live german market below

http://www.livecharts.co.uk/MarketCharts/dax.php

[Resurrection]

The global financial system has been broken for three years.

[GASWAGON]

And everyone during last weeks scare said .....'Don't worry, all will be fine it is just a correction'.... Yeah right!

[Romulus]

Originally Posted by EF_6

And everyone during last weeks scare said .....'Don't worry, all will be fine it is just a correction'.... Yeah right!

I don't buy the 'correction' spin. Most government bailed out their banks in 2008 and early 2009, yet the debt didn't go away. It transferred from banks to governments. Now governments are the ones having to front up with the money to pay back the debt. Most governments who bailed out the banks are now having to introduce austerity measures to reduce their liabilities. No wonder people are taking to the streets and protesting. The banks robbed the public, and now the government is robbing the people again! For the banks it's business as usual again.

We're fortunate, our government doesn't need to introduce austerity measures, although one could argue it is doing so by stealth - a carbon tax and mining tax.

[stev3n]

Very intestering read, wonder what the market will do tomorrow?

[Resurrection]

Based on a much hyped reality TV show which reached it's climax tonight, the prognosis is not promising.

[Elks]

Originally Posted by Resurrection

Based on a much hyped reality TV show which reached it's climax tonight, the prognosis is not promising.

It's in line with what you have been posting for 12 months now. 50% passed in...LOL

[MAD]

Dont you mean 75% passed in and one sold by negotiation afterward?

I didnt follow the show. How did they come to set their reserves?

[MAD]

http://www.heraldsun.com.au/news/mor...-1226118838973

CONSUMER Affairs Victoria is investigating the real estate agents handling the sale of the houses on Channel 9's DIY renovation hit The Block for underquoting.

Inspectors from Victoria's consumer watchdog seized sales documents and advertising material from the offices of Hocking Stuart, Biggin & Scott, Wood- ards and Jellis Craig on Thursday.

The agents, who have all strongly denied any wrongdoing to the Sunday Herald Sun, face fines of close to $25,000 each if found guilty.

Scroll down to blog live with fans during tonight's grand final from 6.30pm (AEST) below

"Consumer Affairs Victoria took a proactive approach to this high-profile sale that has been subject to a lot of media," CAV spokeswoman Heather Abbott said.

The four Edwardian and Victorian properties, which stand side by side in Cameron St, Richmond, went under the hammer last night in front of 400 people at an invitation-only affair held at Fitzroy Town Hall for the show's grand finale, to be aired tonight.

A surprise engagement took place before the auctions when contestant Josh got down on one knee and proposed to his girlfriend, Jenna, with a Tiffany ring.

Jenna, who was in tears, happily accepted.

Each of the four couples - Josh and Jenna, Rod and Tania, Katrina and Aimee, and Polly and Waz - was permitted a maximum of 50 bidders at the town hall.

The couple that scores the most profit over the reserve price - which will be revealed tonight - will win the profit and $100,000.

The three single-fronted properties were initially advertised for $800,000 to $880,000, while the double-fronted house was advertised for $900,000 to $990,000.

Those figures raised eyebrows in real estate circles, particularly as one of the show's judges, high-profile Sydney real estate agent John McGrath, valued them at more than $1 million.

Quote ranges were later removed from advertising.

Underquoting is when a property is advertised for less than the agent's price estimate on the sale authority or less than what the vendor has told the agent they are willing to accept.

Watercress Productions, the production company behind The Block, paid $3.6 million for the four houses.

Typical RE agent, talk up unrealistic prices to the vendor.

[Rodge]

Originally Posted by F6 Concorde

I don't buy the 'correction' spin. Most government bailed out their banks in 2008 and early 2009, yet the debt didn't go away. It transferred from banks to governments. Now governments are the ones having to front up with the money to pay back the debt. Most governments who bailed out the banks are now having to introduce austerity measures to reduce their liabilities. No wonder people are taking to the streets and protesting. The banks robbed the public, and now the government is robbing the people again! For the banks it's business as usual again.

We're fortunate, our government doesn't need to introduce austerity measures, although one could argue it is doing so by stealth - a carbon tax and mining tax.

I don't either. Fact is the Euro zone is train wreck in slow motion and has been ever since the GFC started. That's the real wild card, can they sort their debt problems out, personally I don't think so and problems are being masked by wildly over optimistic growth projections throught the world.

Where's the growth, if the world's strongest economy Germany grew by a paltry 0.1% last quarter and that's before this latest serious rout in the markets what's the prognosis going forward, very bleak I'd say.

Watching CNBC on the weekend and world stockmarkets as a whole lost an incredible 18% of their combined value in just the last three weeks !!

Housing throughout much of the western world is still over-valued and incredible growth over the last fifteen years has been fueled by an orgy of consumer debt and now the party's well and truly over, housing must return to long run normalised level's in the medium term. For example I was in Perth in 1987 and you could buy a pretty good house for $30,000 - $40,000, I hear it would be approx 20 times that now. How are current prices sustainable ?

In summary it appears to me the world is going to hell in a handbasket, pay off debt, ensure you have a bloody good rainy day fund and work to ensure as best you can you have stable and reliable cash inflows, oh yeah nearly forgot, really enjoy your performance car while you can still afford to run it and buy lots of silver and gold coins, the world's monetary systems are almost completly wrecked.

P.S. Carbon tax is complete rubbish.

[castellan]

Originally Posted by F6 Concorde

I don't buy the 'correction' spin. Most government bailed out their banks in 2008 and early 2009, yet the debt didn't go away. It transferred from banks to governments. Now governments are the ones having to front up with the money to pay back the debt. Most governments who bailed out the banks are now having to introduce austerity measures to reduce their liabilities. No wonder people are taking to the streets and protesting. The banks robbed the public, and now the government is robbing the people again! For the banks it's business as usual again.

We're fortunate, our government doesn't need to introduce austerity measures, although one could argue it is doing so by stealth - a carbon tax and mining tax.

The Banks have done noting wrong because the government let them do it all and no one said boo as to the foolishness criminally insanity side of it all.
Well we have another history lesson on casino mentality living life on the roulette wheel.
But someone has been looking to take advantage of the utter stupidity of it all.
Nations are built on firm foundations and nations fall because they have non.

[trippytaka]

No t a good time to be in manufacturing.

Strong dollar takes its toll on jobs
Chris Zappone
August 22, 2011 - 10:37AM


Layoffs by steelmakers don’t mean the end of jobs growth in Australia, analysts say - but that doesn’t mean there won’t be plenty of pain as the economy readjusts to the strong dollar.

BlueScope Steel confirmed this morning that it would scrap 1000 jobs. Its announcement comes a week after fellow steel producer OneSteel flagged 400 positions would be axed, and warned of more job losses to come. Both steelmakers blamed the strong dollar - which has been over parity with the US dollar since March - and weak demand for the cuts.

'‘This is the nature of the structural shift that is happening in the Australian economy now,’’ said HSBC chief economist Paul Bloxham. ‘‘The high level of commodity prices is boosting the exchange rate lately meaning we are getting the structural shift. With commodity prices at the high levels they are, it motivates labour and capital to shift towards the mining industry.’’
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Mr Bloxham said manufacturing, tourism and education would suffer as more investment - and jobs - flowed towards mining and that would mean pain for those industries.

Unions acknowledged the challenges for the manufacturing industry created by the strong dollar, which has contributed to lowering competitiveness at a time when steel production has boomed in Asia.

"We've got to face the reality of the manufacturing crisis that's before us," said Australian Workers' Union national secretary Paul Howes, but he added: "We can't accept job losses as the norm and we can't rely on imported goods in our strategic sectors."

The unemployment rate posted a surprise increase to 5.1 per cent in July, from 4.9 per cent in June. Forward-looking gauges of jobs growth have also weakened in recent months. The Department of Education, Employment and Workplace Relations' internet vacancy index sank 0.8 per cent in July.

The index, which comprises such indicators as positions on job websites Seek and MyCareer, posted its first contraction since June 2009, when the financial crisis weighed on activity and hiring.

The layoffs in the steel sector follow the food-processing company SPC, which cut 150 jobs in Victoria this month. In May, Heinz cut 340 jobs in Victoria and Queensland, shifting production to New Zealand because of the strong dollar.

The retail sector has not been spared either, with David Jones and Myer tipping weaker profits to come, as consumers shop online, often taking advantage of the Aussie dollar’s strength to purchase from overseas outlets.

Mr Bloxham said that although this meant pain for Australian industries, he didn’t anticipate a spike in the unemployment rate in coming months, as hiring remains strong in the mining and resources industries.
Nomura International chief economist Stephen Roberts agreed.

“We have got jobs being created in large numbers but not necessarily in the companies losing employees at the moment,’’ said Mr Roberts. Nonetheless, Australia overall can still has employment growth.

The Reserve Bank, in its quarterly statement on monetary policy, released this month, said. ‘‘The unemployment rate is expected to remain at around 5 per cent for some time, before declining a little towards the end of the forecast period.’’

Mr Roberts said that despite the recent rise in the jobless rate he expects it to stabilise in the low 5 per cent level before coming down again in 2012, driven by the mining investment boom.

[dave289]

Originally Posted by MAD

http://www.heraldsun.com.au/news/mor...-1226118838973



Typical RE agent, talk up unrealistic prices to the vendor.

Seems like the one that sold, sold in the quoted price range. Maybe mcgrath is out of touch with melbourne realestate or maybe he has not kept up to date on what is going on by quoting them at over a mil. The thing is they were bought for 3.6 mil ,when you include stamp duty and legals ,they average $945k each, and thats before you even spend money on it not to mention labour costs . This not only shows the state of the market but also that renovating for profit is pretty much a no go right now.

Sorry to the four or so people that tried to PM yesterday , my inbox was full , I have since deleted some messages so fire away when ready. dave.

[Gobes32]

Originally Posted by trippytaka

No t a good time to be in manufacturing.

It's ok, everyone in Australia is going to work in the mines when manufacturing leaves this country, because the mines need 250,000 workers don't they? (sarcasm)

[trippytaka]

It's amazing how much China is weighing in on the situation. I am trying to figure out if they are trying to help, or they are stoking the fire to make the US and europe look bad.

Chinese paper warns of 'Black Death' of debt crisis
August 22, 2011 - 4:53PM

The "Black Death" of the debt crisis across the euro zone will hurt China's exports, although Beijing's relatively small holdings of euro assets will limit damage to foreign exchange reserves, the nation's top official newspaper says.

The bleak diagnosis for the euro appeared in the overseas edition of the People's Daily, the main newspaper of China's ruling Communist Party, in a commentary by a former central bank official and an economist for the state-owned China Development Bank.

"The euro debt crisis has now been going for nearly two years since the end of 2009, and the sovereign debt crisis has spread like the Black Death of the fourteenth century across the euro zone countries," said the commentary, referring to the rodent-borne pandemic that devastated Europe.
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Although the commentary in the People's Daily does not reflect a definitive view from China's most senior leaders, it and other comments in the official press suggest the euro zone's successive crises have caused anxiety and debate in Beijing about the impact on China.

"The spread of the euro debt crisis will not have as large an impact on our country's foreign exchange reserves as the US sovereign debt downgrade, because euro assets make up far less of our country's foreign exchange reserves than the dollar," wrote Zhang Zhixiang, a former head of the People's Bank of China international department, and Zhang Chao, an economist for the China Development Bank.

"But the euro debt crisis will lead to a decline in real demand that will have a far-reaching impact on our country's real economy," they wrote.

The commentary came only days before French President Nicolas Sarkozy is due to meet Chinese President Hu Jintao in Beijing for impromptu talks that will probably focus on the recent turbulence in global financial markets.

Separately, the main, domestic edition of the People's Daily said there were no "safe havens" from turbulence triggered by European and US debt problems.

"There is a long-term trend towards international capital flowing to emerging markets in Asia," said a commentary in the paper's domestic edition. "But at least for now, Asian currencies are still not a new safe haven."

About a quarter of China's foreign currency reserves of more than $US3 trillion are held in euro assets, analysts estimate. Beijing does not disclose such numbers.

The 27-member EU bloc is China's biggest trade partner, with bilateral trade in goods in 2010 reaching 395 billion euros ($570 billion), a rise of 13.9 per cent, according to EU statistics. Chinese exports to the EU reached 281.9 billion euros in 2010, a rise of 18.9 per cent on 2009.

Chinese leaders, including Prime Minister Wen Jiabao, have repeatedly expressed confidence that debt-laden European nations can overcome their problems and return to healthy growth.

Speaking in Germany in June, Wen said his country could buy the sovereign debt of some troubled euro zone nations if needed.

But the People's Daily overseas edition said the euro zone's problems reflected deep-seated institutional failings that needed to be fixed for Europe to recover confidence and strong growth.

"The euro zone should reform the institutional constraints to economic development, and show a responsible attitude regarding the links between their countries' and their region's economic development and global economic and financial stability," wrote the two economists.

Reuters

[mr smith]

Originally Posted by Gobes32

It's ok, everyone in Australia is going to work in the mines when manufacturing leaves this country, because the mines need 250,000 workers don't they? (sarcasm)

I agree, once this mining boom dies (and it will) and our manufacturing has been destroyed (dont see any one on the horizion to invest massively here, new car plant, yea sure) what then?

[trippytaka]

Originally Posted by mr smith

I agree, once this mining boom dies (and it will) and our manufacturing has been destroyed (dont see any one on the horizion to invest massively here, new car plant, yea sure) what then?

Hence why I never understood why so many people were opposed to a super profits mining tax... if it were drawn up properly to invest the $$ into developing new industries and education and training, Aus would be set up for the future.

Have a look at South Korea, they set out with the goal and focussed on developing technology investments. They are the most computer literate country in the world and their manufacturing is coming along in leaps and bounds.

[mr smith]

Originally Posted by dave289

This not only shows the state of the market but also that renovating for profit is pretty much a no go right now.

I dont think there could have been a bigger backfire for the building related sponsors of this rubbish to show that the biggest waste of money and time right now is spending the next year or so and a few hundred grand on doing up your house to make money. Cant they give these reno adds shows the flick and re-run something cool like the Dukes of Hazzard or Chips.

[mr smith]

Originally Posted by trippytaka

Hence why I never understood why so many people were opposed to a super profits mining tax... if it were drawn up properly to invest the $$ into developing new industries and education and training, Aus would be set up for the future.

Have a look at South Korea, they set out with the goal and focussed on developing technology investments. They are the most computer literate country in the world and their manufacturing is coming along in leaps and bounds.

I agree, if we dont get something long term out of this boom we really are a country of duds. The miners opposition adds showed that as a collective this country can be sold anything.

[BA GT-HO]

Well I am in manufacturing, the company has just bought a new machine from Germany, a $3.5 million dollar investment.

Plus there is that much work they are running 3 shifts 6 days a week and still falling behind..

[mr smith]

Originally Posted by BA GT-HO

Well I am in manufacturing, the company has just bought a new machine from Germany, a $3.5 million dollar investment.

Plus there is that much work they are running 3 shifts 6 days a week and still falling behind..

What industry?
I work in the Auto supply industry and we are constantly putting people off and running with almost no budget. Its not sustanable for much longer.

[gtfpv]

talking to blokes last night between 30 and 60 years old , all agree we are heading backwards about 80 years , where lifes luxuries that have become the norm will go back to the wealthy only .
i'm 42 , grew up without a phone in the house , one 2nd hand family car , one income ( dads) , 3 kids , 3 small rooms , one lounge ,one tv , and one dunny , and one caravan park holiday a year . and mum and dad saved for retirement .
the difference being the country wasnt raped and pillaged by world markets and big corperations doing free trade , and the countries of the world then produced thier own things .
some of the older guys believe tthe world will someway or another revert back to this erra , i'm not so sure as not only did all those things get taken away from the world , so did nationality .

[mr smith]

Pinched this from a blog about the Block. I would watch this.

I’ll put my hand up for being a contestant or maybe even a producer next year. Here is my concept for The Block 2012.

We revisit the unsold homes and demolish them, salvaging anything of value and flog it off on ebay/trash and treasure, and hock the furnishings at Cashies to pay for groceries/school fees/fuel and the other necessities of life that go unattended when you take on intergenerational debt.

The winner is the one that strips the place TO THE BLOCK and maximises the returns

[mr smith]

Originally Posted by gtfpv

talking to blokes last night between 30 and 60 years old , all agree we are heading backwards about 80 years , where lifes luxuries that have become the norm will go back to the wealthy only .
i'm 42 , grew up without a phone in the house , one 2nd hand family car , one income ( dads) , 3 kids , 3 small rooms , one lounge ,one tv , and one dunny , and one caravan park holiday a year . and mum and dad saved for retirement .
the difference being the country wasnt raped and pillaged by world markets and big corperations doing free trade , and the countries of the world then produced thier own things .
some of the older guys believe tthe world will someway or another revert back to this erra , i'm not so sure as not only did all those things get taken away from the world , so did nationality .

I'm already seeing this pan out. We now take picnics with us on weekends out and have dinner in at friends or our place with home cooked meals. Most people I know have taken an interest in growing veg and sharing. Along with valuing simple pleasures. Consumerism has been rampant over the last decade (I'm guilty - dirt bikes, road bikes ,cars, overseas holiday etc) and if your really honest have any posessions given you more pleasure than good times with your family and friends?

[Yellow_Festiva]

Originally Posted by dave289

Seems like the one that sold, sold in the quoted price range. Maybe mcgrath is out of touch with melbourne realestate or maybe he has not kept up to date on what is going on by quoting them at over a mil. The thing is they were bought for 3.6 mil ,when you include stamp duty and legals ,they average $945k each, and thats before you even spend money on it not to mention labour costs . This not only shows the state of the market but also that renovating for profit is pretty much a no go right now.

Only problem is, those 4 properties were already greatly inflated when purchased.

If you dig hard enough, you will find an article on the original sale of the 4 places. They went to auction and got passed in for under 3 Mil (2.7-2.9mil if memory serves).

They were sold after much negotiation for the 3.6mil you mention. The problem is, 'The Block' needed them, at ANY cost it seemed. Can you imagine the vendor rubbing his / her hands together knowing a big budget show is interested in your place? How many other properties would have been available that fit the criteria? Not many if any at all.

Ok, I did the digging for you:

The Block's Watercress Productions paid $3.6 million for terraces

By John Dagge
From: Sunday Herald Sun
June 12, 2011 12:00AM

The Block

The production company behind TV's The Block paid around $950,000 per house before the renovations began, leading some real estate experts to cast doubt on whether or not a profit can be made from the properties.

THE production company behind Channel 9's hit, The Block, may have bitten off more than it can chew after paying $3.6 million for a row of rundown terraces in Richmond.

As the property market cools, Watercress Productions might struggle to cover the cost of sales and renovations to the houses, which are in the shadow of the troubled Housing Ministry estate.

Watercress bought four Victorian and Edwardian terraces in a row after they passed in at auction in November for $2.85 million.

It also paid $198,000 stamp duty, taking the cost of each house to just under $950,000 before a porcelain tile or glass splashback had been put in place.

JPP Buyers Advocates' Catherine Cashmore said Watercress would be "very, very lucky to break even" on the deal on sales price alone.

"They are starting high and it's a very big ask," Ms Cashmore said.

"The houses are situated across the street from the entrance to a supermarket carpark and under the shadow of Housing Ministry flats, which is a price-killer as far as real estate in Richmond goes."

The Block executive producer Julian Cress said the attention to detail paid to the properties made them stand-out buys and tipped high demand for them.

"The finishes, the fixtures, the fittings will make them the best product that is available at the time in Richmond by a long way," he said.

http://www.news.com.au/money/propert...-1226073598839

They may have lost money on the real estate, but the advertising dollars was what the show was seeking.

[Resurrection]

Originally Posted by mr smith

What industry?
I work in the Auto supply industry and we are constantly putting people off and running with almost no budget. Its not sustanable for much longer.

i hear you bro.

[dave289]

Originally Posted by Yellow_Festiva

Only problem is, those 4 properties were already greatly inflated when purchased.

If you dig hard enough, you will find an article on the original sale of the 4 places. They went to auction and got passed in for under 3 Mil (2.7-2.9mil if memory serves).

They were sold after much negotiation for the 3.6mil you mention. The problem is, 'The Block' needed them, at ANY cost it seemed. Can you imagine the vendor rubbing his / her hands together knowing a big budget show is interested in your place? How many other properties would have been available that fit the criteria? Not many if any at all.

Ok, I did the digging for you:




http://www.news.com.au/money/propert...-1226073598839

They may have lost money on the real estate, but the advertising dollars was what the show was seeking.

I did not look that closely at it , but thanks for doing the digging ,that show us that even if they had have been bought for the original 2.85 million that they were passed in at they still would not have made a profit.

So at the original price of 2.85 mil plus stamp duty and legals thay come to 750k each , plus 100k spent on each , makes 850k each just to break even , if you were to add in labour costs at 50k being fairly generous thats 900k each just to break even , so it does not matter which way you look at it , the statement which you responded to still stands firm , being shows the state of the market and that renovating for profit is pretty much a no go right now

It also showed and educated millions of people on the state of the market who may of been previuosly unaware of obliviuos.

[dave289]

Not good , although some cheaper interst rates will be had eventully . This is not a good day for manufacturing or to the confidence of the everyday australian.

http://www.news.com.au/money/over-10...-1226120070199

[MAD]

Originally Posted by dave289

I did not look that closely at it , but thanks for doing the digging ,that show us that even if they had have been bought for the original 2.85 million that they were passed in at they still would not have made a profit.

So at the original price of 2.85 mil plus stamp duty and legals thay come to 750k each , plus 100k spent on each , makes 850k each just to break even , if you were to add in labour costs at 50k being fairly generous thats 900k each just to break even , so it does not matter which way you look at it , the statement which you responded to still stands firm , being shows the state of the market and that renovating for profit is pretty much a no go right now

It also showed and educated millions of people on the state of the market who may of been previuosly unaware of obliviuos.

http://www.smh.com.au/entertainment/...821-1j4pr.html

There's some more info in that article. Notably, a mention of all houses being re-stumped, re-wired, re-plumbed, re-roofed, 3 getting a second floor and 100k spent by contestants. That's a lot of money on top of the purchase price.
It also suggests the sale price was 3.6mil (inc stamp duty)

[EFFalcon]

perhaps it just shows that they paid too much for the joints in the first place?

although i'm saying this having done 0 research or knowing what the place was like to start with.

but i love that it was such a flop