Recession is on the way - Part IV

[noddy]

Probably sometime after September if i'm not mistaken.

Really though this thread is good for laugh when you go back & read some of the outlandish comments made by those from the right.

 

[Max zero]

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Probably sometime after September if i'm not mistaken.

Really though this thread is good for laugh when you go back & read some of the outlandish comments made by those from the right.

Yeah good work by Swan to have a mining boom right when we needed it. We should have booms more often they are great.

The UK and the US should of had a mining boom too then they would of avoided recession as well. Someone should tell them.

 

[LouisCK]

Yeah good work by Swan to have a mining boom right when we needed it. We should have boons more often they are great.

If we'd followed Gough's lead we might be in that exact situation actually.

 

[JoondalupJ]

Risks of a recession are rising but still low.

Guess work. Mining booms come and go.And when they are gone its just the mining companies taking a breath. They come back. Its all manipulation. They tell you with all their statistics thats this and that is happening and China won't buy any more , its been said for years , stop worrying , if we get another pack of dogs giving loans to everyone and then selling off the debt collecting to someone else to profit on , then the bloody people who get the loans can't pay them back, THEN START WORRYING!
Do you think that could happen again , probably , but not for a while and maybe never .
Nah the world will be OK, ECONOMICALLY , I mean all wars are over money anyway, everybody wants it they won't rock the boat again for a long time. Business turns the world around.

 

[greennick]

Guess work. Mining booms come and go.And when they are gone its just the mining companies taking a breath. They come back. Its all manipulation. They tell you with all their statistics thats this and that is happening and China won't buy any more , its been said for years , stop worrying , if we get another pack of dogs giving loans to everyone and then selling off the debt collecting to someone else to profit on , then the bloody people who get the loans can't pay them back, THEN START WORRYING!
Do you think that could happen again , probably , but not for a while and maybe never .
Nah the world will be OK, ECONOMICALLY , I mean all wars are over money anyway, everybody wants it they won't rock the boat again for a long time. Business turns the world around.

What a weird rant. That happens all the time. It happened just last week by Suncorp.

 

[JoondalupJ]

What a weird rant. That happens all the time. It happened just last week by Suncorp.

Exactly!

 

[greennick]

Exactly!

In fairness it is fine as long as you know what you're buying. There is a reason none of these products in Australia had issues, we have adequate regulatory standards around it, which the US didn't...

 

[Ripper]

Big day today, China has just had a "credit freeze event"

http://www.zerohedge.com/news/2013-06-19/china-interbank-market-freezes-overnight-repo-explodes-25

It used to be said that when the US caught a cold the rest of the world caught a fever, but now I think when china catches a cold Australia catches Pneumonia.

Stock market down 2% (Materials down nearly 4%
Dollar down to 91C
Gold and other commodities down heaps.

GFC 2 is on the way.

 

[LouisCK]

Buy international stocks now.

 

[JoondalupJ]

Big day today, China has just had a "credit freeze event"

http://www.zerohedge.com/news/2013-06-19/china-interbank-market-freezes-overnight-repo-explodes-25

It used to be said that when the US caught a cold the rest of the world caught a fever, but now I think when china catches a cold Australia catches Pneumonia.

Stock market down 2% (Materials down nearly 4%
Dollar down to 91C
Gold and other commodities down heaps.

GFC 2 is on the way.

It'll be back . China goes up up up up, down, then up up up up .

 

[greennick]

Big day today, China has just had a "credit freeze event"

http://www.zerohedge.com/news/2013-06-19/china-interbank-market-freezes-overnight-repo-explodes-25

It used to be said that when the US caught a cold the rest of the world caught a fever, but now I think when china catches a cold Australia catches Pneumonia.

Stock market down 2% (Materials down nearly 4%
Dollar down to 91C
Gold and other commodities down heaps.

GFC 2 is on the way.

I find it funny. The drop in commodity prices is largely offset by the drop in our exchange rate. Yet still the share market gets hammered.

 

[Financialpanther]

In fairness it is fine as long as you know what you're buying. There is a reason none of these products in Australia had issues, we have adequate regulatory standards around it, which the US didn't...

Australian securitisation is considered near the best quality in the world due to transparancy, product and performance. Comparing this to the bad practices in Europe and the States is highly dubious and so far off the mark that its wrong. The fact remains, the Oz system is very strongly regulated and the nature of lending in Oz is conservative for these instruments (the average Loan to Valuation is 60% and all loans are covered by loan mortgage insurance).

 

[greennick]

Australian securitisation is considered near the best quality in the world due to transparancy, product and performance. Comparing this to the bad practices in Europe and the States is highly dubious and so far off the mark that its wrong. The fact remains, the Oz system is very strongly regulated and the nature of lending in Oz is conservative for these instruments (the average Loan to Valuation is 60% and all loans are covered by loan mortgage insurance).

Exactly, the risk profiles are so different it is not funny.

 

[LouisCK]

So regulation leads to stability? Who would've thought.

 

[Financialpanther]

So regulation leads to stability? Who would've thought.

Got to see regulatory bodies in Europe last week creating massive instability in this type of funding market - its scary.

 

[greennick]

So regulation leads to stability? Who would've thought.

Smart regulation does. Changing regulations on the fly, too lax regulation or too much regulation all can cause instability just as much as no regulation.

 

[LouisCK]

Smart regulation does. Changing regulations on the fly, too lax regulation or too much regulation all can cause instability just as much as no regulation.

So historically speaking, Australia being a country more prone to heavier regulation and protectionist policies has overall been a good thing?

 

[greennick]

So historically speaking, Australia being a country more prone to heavier regulation and protectionist policies has overall been a good thing?

Bit too much of a blanket statement for me.

 

[LouisCK]

Fair enough, I can see where over the top regulation could be bad (i.e. white australia policy).

But it seems we've been lucky in that while Regan/Bush/Clinton/Bush and Thatcher were de-regulating everything, Keating, Howard, Hawke took a much more careful approach. There were definitely oversights (i.e. foreign investment in property is the elephant in the room, not foreshadowing that the mining boom does have some negatives to it etc).

* its good to be an Aussie. We're always whinging about our politicians, but overall we're one of the best-governed nations around.

 

[greennick]

Fair enough, I can see where over the top regulation could be bad (i.e. white australia policy).

But it seems we've been lucky in that while Regan/Bush/Clinton/Bush and Thatcher were de-regulating everything, Keating, Howard, Hawke took a much more careful approach. There were definitely oversights (i.e. foreign investment in property is the elephant in the room, not foreshadowing that the mining boom does have some negatives to it etc).

**** its good to be an Aussie. We're always whinging about our politicians, but overall we're one of the best-governed nations around.

Agreed, we've got it good.

I think we need less regulation in some areas though, which is why I wouldn't argue it has always been a good thing.

For example, it takes 3 years to get environmental approval for a mine. There is no reason it should take that long. It used to take 12 months to 18 months. It just blows out timetables and costs and results in lost revenue for the state and federal government as projects generally end up coming on line when prices are lower. We need to be faster to market, while still ensuring we protect the environment. There is no reason it should take so long.

Or at a local level in WA, what is up with our liquor licencing regulations? They deny small bars as there are already too many drunks, but ignore the fact most of the drunks come from big bars. Related to that, why does it take so long to get health department approval and council approval to open a cafe. This means small businesses need to have long lead times before they can open up and it increases costs, adding unnecessary barriers to entry. And why can Bunnings be open from 7am on a Sunday if it sells just hardware, but once it starts selling washing machines, they can't open till 11am. Seriously, WTF?

Just some of the thousands of examples of regulation for the sake of regulation, that just adds unnecessary costs to businesses and prevents entrepreneurship.

 

[medusala]

So regulation leads to stability?

Rarely. See Fed, see Euro bank balance sheets compared to US.

Why haven't the hedge funds brought the financial system to its knees?

 

[LouisCK]

Didn't europe go through a huge period of de-regulation and opening up of markets with the euro?

 

[LouisCK]

I'm no expert on that btw. But I dare say the below average european still has a better quality of life than the below average american.

 

[medusala]

Didn't europe go through a huge period of de-regulation and opening up of markets with the euro?

Not really. IR is very (extremely) regulated in Europe, hence massive youth unemployment, banking is still far more regulated as well (just opening on a Saturday in some countries is very hard, even in somewhere like Gemany). The Poms are probably the most deregulated but they still keep things like restricted Sunday shopping hours.

Despite that regulation however, Euro banks ended up being more leveraged than US banks. They cant fix that any time soon and they hold a heap of Euro govt bonds. Vicious circle. If countries default they take the banks with them.

A lot of smart heads said a while ago China would implode. It may be sooner rather than later. Once they go Australia will suffer. Cash is already fleeing ie AUD plummeting.

 

[LouisCK]

Yeah I just plonked a decent amount in one of those Global top 50 ETF's yesterday.

I'm getting the hell out of Aussie assets, to put it mildly.