Where does it stop

[Nathan S]

And I was intending to shut up for a bit, but you've brought up another bug bear of mine: Nobody builds 2 or 3 beddies anymore!

All of these new 'estates' are full of houses that have four bedrooms and two bathrooms as a minimum!
WTF!? Our birth rate is falling (although bouyed by Costello's baby bonus), so why do we need the McMansions?
How much cheaper could entry level housing be if we had a 2008 version of the simple, unpretentious little houses that are scattered through our established suburbs?

Yeah, I know that they're not the nicest box to live in, but I'll bet most of us grew up in them, and it didn't do us any harm!
I've lived in plenty as an adult, and it didn't harm me then, either!
No wonder we've got a fricken rental crisis when all of these houses are knocked down and replaced with over-sized McMansions that everybody has to stretch to afford (either to buy or to rent).

[firko]

Good work Graeme in explaining the crisis in terms even I can understand.
I was thinking before about the American economy and the social and financial structure that has seen an ever broadening of the gap between the black/hispanic/poor white underclass and the affluent middle to upper class and I can't help wonder how America would have evolved if their tax dollars weren't squandered on space exploration to the Moon and Mars that has done nothing nothing to benefit its people in a social sense, or spent trillions fighting (and losing)wars that had nothing to do with them such as Vietnam and Iraq. Perhaps some of that money could have financed an efficient low cost housing system, thus avoiding the greedy bank involvement that has fed our present catastrophe. They could also have created a National Health scheme that would have avoided the current disgrace where people are turned away from proper medical care because they can't pay.

Imagine what a wonderful place America could have been if those trillions of dollars could have been used for the good of its people instead of funding the quest for World domination. I lived in America for seven years, have a number of dear American friends including an ex wife, and loved every minute I was there. The people as a race are warm, inviting and in reality, little different to us. Sadly they have been misled for generations by their government spin doctors who have hammered the free enterprise American doctrine into their psyche and created a distrust of any societal system that differs from their own. It's created a society that blindly believes that their way is the only way and it's created a society that elects maniacs like George Bush. Thankfully I suspect there is a growing groundswell of Americans that have had enough of the fundamental religious ultra right controlled media and government and the greed that goes with it and will elect Obama in November. Let's just hope that he can not only bring the country back on the correct political path but can also regain the trust in America that the rest of the world lost many years ago.

I

[Nathan S]

http://www.mynorthwest.com/?nid=75&sid=94604

And they were absolutely right, until they turned out to be wrong.

Their mathematical virus took a cyclical free market downturn and turned it into a Biblical catastrophe.

You have to be smoking some pretty potent weed to blame some overextended homebuyers in poor neighborhoods for Wall Street's decision to pile up 60 trillion dollars in credit default swaps. 60 trillion, you see, is about four times last year's Gross Domestic Product.

The problem with a house of cards isn't the one card that slips -- it's the idiot who chose playing cards as a building material to begin with.

[mx250]

http://www.mynorthwest.com/?nid=75&sid=94604

And they were absolutely right, until they turned out to be wrong.

Their mathematical virus took a cyclical free market downturn and turned it into a Biblical catastrophe.

You have to be smoking some pretty potent weed to blame some overextended homebuyers in poor neighborhoods for Wall Street's decision to pile up 60 trillion dollars in credit default swaps. 60 trillion, you see, is about four times last year's Gross Domestic Product.

The problem with a house of cards isn't the one card that slips -- it's the idiot who chose playing cards as a building material to begin with.

An interesting reference and read Nathan. Pretty much what I had sussed out but in greater detail naming names etc.

Also identifies the 'too smart by half' breaking of the basis principles - securities must have value behind them.

It also identifies that the problem has been identified for some time and their pollies did nothing. There is evidence that they were 'bought off' (even if it was indirectly) by the 'pigs with their nose in the trough'.

McCain was one of the pollies charged with heading off the problem. Corrupt or not he either didn't have the brains, brawn or backbone to do his job. And now they want to make him president . The Peters Principle in play? or Spin Doctoring supreme. God help all of us .

Obama's connection may not be as strong but the Demoncratics connection is; and Obama is just a figurehead talking puppet for the Democrats. God help all of us .

It is so evident that both the American Election process and Big Business is corrupt and corrupting but the Americans can't come out and say it. Quite the opposite, they chant, and believe, that it is the "Greatest Democracy on earth", "America is the Greatest Nation on earth". Question that and you get yelled down as being "unpatriotic" or "un-American" - the most damning of all crimes in America.

For change to happen about 300 million Americans have got to realise and let go of many interlocking tenets.  Without an absolute catastrophe it arn't gonna happen.

Maybe 60 trillion dollars in credit defaults will be that catastrophe. God help all of us .

[oldfart]

Nathan , WTF wrong  with having a Mc Mansion on a few acres      and I've seen posts of your shed 

[Nathan S]

Surely there's a new suburb near you, where you could walk from roof-top to roof-top without fear of falling?

The bit where you've got it on a few acres is very different to having it on a 550square metre block, at least in my view of the world.

[ba-02-xr]

Back on page 1 Nathan made a good comment and I ask the question again now, as I am to dum to work it out. If the Ausi economy is not that bad & the US is screwed why does the Aus $ do what it did next to the US $. I dont understand this & would like to.

[Tim754]

Read to what I said please ba-02-xr  Our beloved gutless vote grubbing leaders and their equally snot filled gutless oppositions in Aust and NZ have to set a FIXED in relation to price now for our Dollars!!! as I said 10 maybe 15 cents above what the USD at anytime. Farmers miners and exporters will squeal but shit if they need the goods they got to pay a fair price. Will except fair trade (real trade deals not the lies and bullshit the pollies sell us!!!) for cheap goods like oil we may require as long as the detail is printed in newspapers for us to read, NO more Liquid lpg or natural gas to Japan for 1 or 2cents a litre and we pay the bloody freight shit deals.  The days of namby pamby lets kiss all the other parts of the worlds arses as they root ours must stop now. Fair and free trade must be such. Countries and unions of countries that subsidize farmers and others with fake money to produce  nothing are not to be given anything of ours till that stops dead !no more !  Australia and New Zealand stand as one.

[YSS]

I think we should give Tim a go as Prime Minister ! It could not get worse , only better and Tim would have a Job again

[geraldo]

you know I have heard more commonsense about how to run a country on this thread than you will ever get out of the motley lot that actually run our countries
with the imminent elections here in godzone I think it is timely to launch a motorcyclists party to stand for parliament ,get elected and make this country proud again ( a balanced mix of dirt /road /VMX riders should do the trick)

here are some policies for our manifesto

-all golf courses will be immediately turned into moto-x parks - (body armour will have to be compulsery to cope with flying golf clubs)
-no straightening of good roads without permission of a committee of sport bike riders ( who will of course have to immediately go out and ride the road at high spped to assist with their decision)
-an immediate complete lifting of all speed limits for motorcycles (except harleys - oh thats right ,doesn't matter for harleys as they struggle to make the speed limit!!!)
-no campervans on the road during the hours of daylight

all other suggested policies will be looked at (over a beer of course)

please post your suggestions here

[Nathan S]

If the Ausi economy is not that bad & the US is screwed why does the Aus $ do what it did next to the US $. I dont understand this & would like to.

As I've got too much time on my hands, I've been doing as lot of reading on this.
I've read a lot of utter shit.

Today, my stupid and annoying Yahoo community thing finally asked a question that I gave a rat's arse about: "Why is the Australian dollar dropping if our economy is good?". The link is here, but this is the best/least bullshit-full/most plausable thing that I've ever read on this topic:

This will take some explaining, so bear with it..!

The value of the currency is linked to the value of the products that the economy produces as well as the central bank's value.

So in our case, we had huge demand for our key products (resources, agriculture, primarily) and overseas buyers were willing to pay high prices for it. This meant that Australia was a "good bet" for future profits. The Aussie dollar rose strongly against other currencies because overseas investors bought into Australia - selling US Dollars, Euros or GB Pounds (whatever...) in order to get Aussie Dollars. Laws of supply and demand: people want something (the Aussie) and the price of it goes up when supply is limited. So that's one reason...

This was compounded by the Reserve Bank's policy of increasing interest rates to fight inflation. Overseas investors saw the Aussie as a way to get more interest on their money - in Japan, for example, the equivalent of $1m in Yen would earn only $10,000 a year in interest. The same sum in Australia earns $70,000 or more. This makes the Aussie a "high yield" currency.
If the currency values stay the same relative to each other, an investor makes more money in Australia than Japan. Therefore, investors in low-yield economies (Japan, USA, Euro-zone) where the interest rates are low were buying currencies where interest rates were high (Australia, New Zealand, Iceland, to an extent UK). This also pushes up the relative value of the Aussie compared to the US Dollar (laws of supply & demand again).

So that's the basic mechanics that brought us to where we were in, say, August 2008.

Now - the credit crunch effects unravel and we are in a position where the future is uncertain. The USA has announced a US $700billion investment in its financial system (compared to Australia's potential AU$20billion infrastructure fund). This suddenly means that the US is a "good bet" for future growth, or to at least ride out the coming economic storm. So what do investors do? They do two things:

1. they cut back on production of goods, e.g. in China, Japan etc. who buy Australian resources. Australia is now not so attractive to invest in as investors don't know whether the resources market will hold up (i.e. sell their investments in Australian companies and therefore sell Australian dollars)

2. investors seek a "safe haven" for their currency funds and go to the currencies they know will hold their value - traditionally, the US Dollar and to some extent the Swiss Franc. Return is not so important now as holding value, so the high-yield currencies (AUD, NZD, ISK, etc.) are sold off and the safe currencies (USD, CHF, [and compared to the Aussie, GBP,EUR, SEK], also, JPY) are bought. Laws of supply and demand again - the price of the currencies nobody wants falls.

The same thing has happened to the South American currencies and some of the Asian currencies.

When (if?) the crisis is over, and demand for Australian resources bounces back, the Aussie may strengthen. Until then, it will be valued relatively lower.

Internally within Australia, the value of the Aussie will be important for imported goods so far as the average consumer is concerned - especially consumer electronics, oil and transport, cars, etc. and no doubt it will have a knock-on effect to agriculture and food so that costs of groceries will increase.

The government's moves are only intended to shore up domestic consumer demand and to cushion domestic productivity. Our banking system is strong, but are we really well placed to weather the storm when so much has been bet on the resources boom continuing? If demand in the US falls, China's production will fall, which means fewer resources from Australia, which means cutbacks in production and potentially job losses. Not as rosy as the government would have us believe... hence if they start investing in infrastructure, that will provide jobs so the unemployed can potentially find work.

The next phase of this will be the property part of the cycle, which will happen in the next 12 months or so: people losing their jobs or their investments now have insufficient money for the mortgage and prices fall.

I hope that gives you a view that helps.

[ba-02-xr]

That sounds more understandable.

[Tim754]

The same old problem will come back for sure. The "Investors seeking safe havens' are not using their own finance................... Its all a cock and bull, smoke and mirrors set up based on credit that is really does not exist. Credit is a proper concept, I lend you a real twenty dollars out of my pocket ,you give me the kids as a security and get them back next week when you pays back the $20 and what ever interest .  Banks and stockmarkets and "future traders etc do not use real cash as they make up figures of what they think they can  , then are supported by fake companies that say they are seventy three A credit rated.
 

[YSS]

Looks like not much has changed , exept we get a few months of grace   

[mainline]

did anyone watch the 4 Corners episode last night? it was a repeat of last years show which looked at the US sub-prime loan system.

If you missed it, these loans are quite literally pushed onto lenders as the best option by brokers who are paid more by lenders for recommending these loans over others. They have a built-in "reset" arrangement whereby at a set time in the life of the loan eg. 3 years, the interest rate jumps from the attractive intitial rate of maybe 7% up to maybe 13 or 14%

In most cases where these things have been foisted onto lenders, this little detail was glossed over. The 2nd tier banks kept paying the brokers big bucks, and the upper level banks kept buying up this bad debt for whatever "clever" financial forkery these wankers do, leaving the 2nd tier banks free to keep going.

The scariest part of the show was an interview with a guy who was running some sort of support agency for people who were about to lose their homes or already had, in Cleveland, Ohio. 1 in 20 houses there were already empty (this is back in 2007) and houses were being passed in at auction for $1000 !!!.

He stated that he couldn't see how Cleveland as a city could continue to even exist into the future!

One of the main points of the show was that the vast majority of these loans hasn't yet reached the reset point.