Good morning

I conduct property research and from time to time publish articles on the Australian real estate market. I read your blog today on the Australian real estate bubble and agree with some of your points about affordability, debt service ratios and loan to value ratios.

I have a media release about the first home owners real estate bubble eg FHO who have purchased homes at 90 to 100% LVR. What happens if the market stays flat or goes down. They will be locked into negative equity for how long??

With the threat of the upward cycle in interest rates mortgage (overall debt) stress will increase and home loan arrears, defaults may increase resulting in further home repossessions, bank fire sales and loss of equity (life savings) for individuals.

The effect is not just on the individual or family but has far reaching consequences for our economy and our society

Can you advise if you accept media releases or material for publication

Thank you

Kind regards

?

John Taplin

Synergy Trading (aust) Pty Ltd

Property researcher and buyers advocate

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Who controls the Fed? Who appoints its Chairmen? Who sets its policies? Is it conceivable that Greenspan & Bernanke are daft? Are Kohn and Geithner daft? In some peoples’ minds, Bernanke is a huge failure. In other peoples’ minds, he is a huge success. “Failure is Success” sounds Orwellian – like the “War on Terror”. Appearances can be deceiving!

Anyone who thinks that Obama is the one who made the decision to reappoint Bernanke (and appoint Tax Cheat Tim to the Treasury) is living in Fantasyland. Who “controls” America? Ariel Sharon knew it.

Do those in power give a “rats” about economic models, right or wrong? The ‘model’ they use in running the American (and Global) economy is heavy on Deception, Propaganda and LIES. THEY have a PLAN – and other peoples’ models are not part of that Plan – or ever will be!

Any economic model will shatter into so many pieces when it runs into the variable of power. Models are only right or wrong in the Ivory Towers of Academia. Of course, the endless debate will keep people like Krugman, Roach, Shedlock, Denninger, Roubini, Hudson, Whitney, Keen, etc, etc, etc. busy (and the rest of us entertained) ’til the cows come home.

Meanwhile THEIR PLAN is unfolding – and it CAN’T be stopped!

theres obviously no limit to their grandiosity,

they seem to have migrated from trying to take over comodity markets, to trying to take over middle eastern countries with their commodities in tow,

i must concurre with contrarian, re silver,

actually there is an cautionary tale re getting too heavilly into silver,

in the 70′s nelson bunker hunt and his brother william thought it was a good idea as well,

infact they thought it was such a good idea they decided to corner the silver market

and they did for a while until silver thursday hit on 27th march 1980,

during this merry episode, silver went up from $11 to $50 and then back down again to $11,

in the end the brothers said goodbye to about one billion dollars of the family fortune

quite a substantial amount in those days, even for texas oil barons

From the FT

“However, the Riksbank hopes that by charging banks for saving their money, rather than paying them, it will encourage them to increase their lending to individuals and businesses, boosting the economy. It also hopes that it might encourage them to divert the money into other assets, such as government bonds or even highly rated corporate bonds. This would bring down bond yields and act as an stimulant.

In the UK, there have been signs that banks are switching cash into short- dated government bonds following hints from Mervyn King, Bank of England governor, that the policy could be introduced there.”

A tobin tax would significantly dampen the potential effects of international currency speculators exploiting interest rate arbitrage that currently make significantly negative nominal rates impossible.

Once this potentially hyper-inflationary danger is removed its quite likely that moderate negative nominal rates on savings are sustainable over the long term, and it will also ensure that government deficits remain sustainable as investors move into long dated bonds to avoid potentially negative rates on deposits and short term bonds.

It all depends on what constitutes Bernanke’s real “job”. It most certainly is not looking after the interests of hedge fund managers or the unemployed. If his job is to protect the Banksters then he has performed extraordinarily well. That is beyond question.

The problem is not Bernanke- it is the Fed itself, and the wealth theft mechanisms arrayed against US citizens. Not that the penny has dropped with most people. Baker misses that point. Changing Fed Chairman won’t change the Fed’s role/position – THAT is the key and core issue about Bernanke and his re-appointment.

I remember reading an article about how Bernanke had to hold a meeting with hedge fund managers because he didn’t know how that industry operated.

Dean Baker says it well:

“Of course if we were to grade his performance at the Fed, it would be hard to give Bernanke anything other than a huge “F.” After all, it was the Fed’s policy to allow the housing bubble to grow unchecked, with the idea that it could just pick up the pieces after it burst. This has led to the worst downturn since the Great Depression, likely costing the United States more than $6 trillion ($50,000 per family) in lost output.”

“Just to be clear, if Bernanke were in any other line of work, it would be absurd to imagine him being reappointed. He is the cook who burnt down the restaurant by leaving the stove on overnight; the doctor who amputated the wrong leg; the school bus driver who drunkenly drove into oncoming traffic. But even by the low standards of economic policymakers, Mr. Bernanke does not deserve another 4 years.”

http://www.cepr.net/index.php/op-eds-&-columns/op-eds-&-columns/bernanke-reappointment-campaign/

“But more importantly, Bernanke is waist deep in responsibility for this mess. Before becoming Fed chairman in January of 2006 he had served on the Board of Governors since 2002, and had been head of President Bush’s Council of Economic Advisors from June of 2005. After Greenspan, there was probably no one else better positioned to combat the bubble.

The attendees of GreenspanFest ’09 may not want to be so rude as to discuss their culpability for this disaster, but that should not prevent the rest of us from raising the topic. It would be an insult to the tens of millions of people who have lost their jobs, their homes, and/or their life savings to see Bernanke reappointed. Failure should have consequences, even for central bank chairmen.”

http://www.cepr.net/index.php/op-eds-&-columns/op-eds-&-columns/greenspanfest-09-and-the-reappointment-of-ben-bernanke/

On a housing oversupply, Chris Joye does make a good point when he says:

“One of the most laughable explanations that you sometimes hear is that based on the Census data there is a large stock of vacant homes that could serve as substitutable supply. But I addressed this myth in a previous post (see here). The short response is that because of the ABS’s survey methodology, Australia has always had a stock of 9-10 per cent of vacant homes in all Censuses carried since 1976.”

http://www.businessspectator.com.au/bs.nsf/article/dogma-does-not-gel-with-data-pd20090828-vc23p?opendocument&src=blb&is=property&blog=concrete%20detail

Demand can easily be ramped in our market when enough bullish sentiment creates the urge in a critical mass of people to “trade up”. Likewise, the sense of threat to job security and incomes removes that influence and a floundering market ensues. We have that now. declining prices will happen only when demand for property takes a major hit.Property prices have not hit a “tipping point” because sufficient support has been deployed to keep Australian’s employed, despite there being less hours worked and less income earned.

That finely balanced dynamic is in play right now.Jobs ,incomes and the perception of their security, will determine what the future holds for Aussie property prices. Meantime, our Govt and their property spruickers in the media are going hard at it ensuring we all continue to buy the “house prices can only go up” mantra.

I see 3 major determinants of Australian jobs and incomes;

1) The China story.

2) The stock indices (super/retirement security , consumer confidence and preception of our financial future)

3) The willingness of the Rudd Govt to hock the nation into obcene levels of debt.

Notably, 1 and 2 are outwith our control.

March 18 was when the Fed first announced it would be buying $300 billion in treasuries over a 6 month period ending September. There have been average weekly Fed T purchases of $10-12 billion to date – that means $10-12 billion has been pumped into the US market every week since mid March. Small wonder then that da Boyz at Government Sachs and the other primary dealerz have been able to pump the US market (and don’t forget all those swap lines that Uncle Benny’s got pumping $s out to Aus and Europe to help keep everyone afloat just one more day).

OK, so I’ve been waiting for things to head south come mid September, but apparently the Fed is a bit scared that the tankage is going to be massive if Benny just stops monetizing those Ts and “supplying liquidity to the market” come Sept, so now the plan is that the Fed should spread what remained of that $300 billion (approx $31 billion ) out until the end of October. This means that the amount of play money that the Fed gives to the primary dealer boyz to go spend in the casino every week drops from $10-12 billion per week, to about $5 billion per week. I can’t imagine that’s going to keep the SPX etc on an uptrend. And things’ll get pretty rocky around the end of October unless Benny wants to keep on buying Ts.

Anyone watching DXY? I wonder what’s going to happen to the US dollar if the Fed keeps on with QE past October. Maybe it won’t be so bad if everyone else goes at it hell for leather as well.

Anyway, back to my lair to to install a nuclear bunker in it before the end of October rolls around…just in case da banksta boyz in the USA can’t come up with another new innovation to keep the world ponzi economy chugging along just a little longer.

1. A significant number of migrants are unable to buy a house for the first few years after the arrival. Some of them are willing to accept quite crammed conditions so the pressure on the market might be much lower than expected.

2. On the other hand there is a genuine shortage of apartments in the most sought-after suburbs (at least in Sydney). There might be a glut of houses elsewhere. We don’t have a single market. We have several sub-markets linked together.

3. The possible collapse may not affect the whole market in the same way. There may be suburbs or towns affected. This can be triggered by unemployment or rising mortgage rates.

4. There may be a considerable delay before people start defaulting. They will save on anything else before giving up on a mortgage. It is interesting to see that the buffer has been recently enlarged by the government.

5. It is possible to imagine a scenario when investment properties are offloaded what floods the market. These properties may or may not be cleared by first home lemmings.

6. The pool of potential first home lemmings might have been depletted and may not replenish itself for a few years time.

7. The social mood and herd behaviour may change suddenly if exchange rate of AUD changes suddenly what we cannot exclude.

8. As the bubble grows the margin of the “equilibrium” will get narrower. But we can still imagine a Japan-like scenario of Great Stagnation.

9. Baby-boomers may have to downsize. This can change the balance. The lifestyle expectations may also change. The article was written from the position of “elightened consumerism”. What if not much is left to consume?