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Dollar plunge may burst our property bubble (Read 8288 times)
Sir lastnail
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Dollar plunge may burst our property bubble
Sep 14th, 2014 at 10:53pm
 
Not good news for the eternal optimists here on this forum who keep telling us that only aussie house prices increase indefinitely Cheesy LOL

http://www.heraldsun.com.au/business/dollar-plunge-may-burst-our-property-bubble...

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Dollar plunge may burst our property bubble

ANYONE who doesn’t believe we’ve been living through the mother of all residential property bubbles clearly hasn’t been to an auction on one of the recent Saturdays, yesterday’s still — just? — included.

Down here in Aussieland, we’ve been riding on two bubbles over the past year or so and they both derive from the absolute granddaddy of all global bubbles — the zero interest rates and the massive printing of money, led by the US and repeated pretty much across the entire developed world.

That’s zero pretty much everywhere else other than Australia and New Zealand. This has led to the bizarre and certainly unique situation that our Reserve Bank’s 2.5 per cent official rate is at the same time both too attractively low and too attractively high.

Our first bubble — in property — is because it’s “too low”. Mortgage interest rates, which are priced off that official rate, have never been as low as they are today. People are borrowing and buying.

The second bubble — in the Aussie dollar — flows from it being ‘‘too high”. All that foreign money sloshing around in global capital markets has been pouring — or being dragged by our banks — into Australia chasing our “high” interest rates.

As I noted last week, three big things happened running down to last weekend. China might just have sneezed, the European Central Bank went all the way to zero, and the US jobs numbers looked soft. This added up to interesting times ahead.

Now in the past week, we might just have seen the Aussie dollar bubble starting to pop. The really big question is if the one bubble pops, will the other follow?

In the previous week, the Aussie had seemed to defy gravity. When iron ore prices went south — China sneezing? — the Aussie actually went up, threatening to go above US94c.

This week, though, it went down one big number on Tuesday, another big number on Wednesday and kicked up only briefly on the spectacular 120,000-plus jobs number on Thursday. By Friday night, it was teetering just above US90c.

Be careful, be very careful, what you wish for. The Aussie’s clearly been too high; RBA governor Glenn Stevens wants it at about US85c or so.

That would be the opposite of the interest rate mix. At US85c it would be both not too high and not too low. Not too high as to strangle the non-resources side of the economy, not too low as to start pushing up inflation from imported goods.

Two problems, though: you can’t just dial up the desired number for the Aussie. History tells us two things: when it breaks it breaks suddenly and then goes much further than you would expect or want.

Second, an Aussie plunging would take us into new and completely unpredictable territory in terms of the global backdrop.

We have never been in this position before — with China underwriting our economic prosperity and US money-printing pouring money into the country.

So self-evidently, we have also never been in the period after they reverse. If indeed they are in the process of so doing.

If the Aussie dollar does pop, two things are likely to happen to threaten to burst the property bubble as well.

The Aussie falling means less money coming into the country chasing our “high” interest rates and direct asset purchases. It would also mean the banks would have less money or no longer as cheap money to lend. In short, not just if you’re planning an overseas holiday, but if you are planning to buy or sell property, watch the Aussie.

As for that jobs number, it was obviously and so self-evidently completely wrong. It’d be the equivalent of nearly two million jobs being created in the US in a single month — trust me, they’d think they were in a boom if they got 500,000.

There’s a much more general message out of it, which the various economists and commentators will almost certainly not learn.

This is that even “normal” monthly jobs numbers are meaningless. A figure of 121,000 looks wrong, so most commentators treated it with caution. Exactly the same applies to a figure of 21,000.

But instead, commentators will authoritatively opine that such a figure shows the economy is picking up pace, or the opposite, depending whether it’s a plus or minus.

Two things so far as policy is concerned flow from this. In Canberra, the Government needs to ditch attempts to make major changes to the budget.
It’s pretty silly politically to keep banging your ahead against a brick Senate wall.

But that aside, what the country needs is stability in government.

That leads to the second thing — once again it’ll be wise to leave management of the economy to the RBA. It can act quickly and effectively as needed.
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In August 2021, Newcastle Coroner Karen Dilks recorded that Lisa Shaw had died “due to complications of an AstraZeneca COVID vaccination”.
 
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Laugh till you cry
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Re: Dollar plunge may burst our property bubble
Reply #1 - Sep 14th, 2014 at 11:54pm
 
The end of the property bubble will be the end of life as we know it in Australia. Hundreds of thousands will be out of work in the building industry. Building supply manufacturing and sales will collapse.

The economy will be a train wreck.

Manufacturing is decimated and will not easily recover.

Closet poms will return to UK in droves. Wait a minute, that's not so  bad. Come on train.

The boom-bust-boom-bust cycle. The bigger the boom the bigger the bust.

Quote:
Fund manager Evy Hambro, who oversees a $US7.3 billion global mining fund for BlackRock, said it was odd the Australian dollar had remained high given weak iron ore and coal prices. “That relationship seems to be unusual, and therefore it’s likely that something is going to give. It could be that the Australian dollar weakens or that the iron ore price recovers in the near term. Our best guess is that it’s probably a little bit of both.”
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« Last Edit: Sep 15th, 2014 at 10:42am by Laugh till you cry »  

Please don't thank me. Effusive fawning and obeisance of disciples, mendicants, and foot-kissers embarrass me.
 
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Sir lastnail
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Re: Dollar plunge may burst our property bubble
Reply #2 - Sep 15th, 2014 at 11:12am
 
Laugh till you cry wrote on Sep 14th, 2014 at 11:54pm:
The end of the property bubble will be the end of life as we know it in Australia. Hundreds of thousands will be out of work in the building industry. Building supply manufacturing and sales will collapse.

The economy will be a train wreck.

Manufacturing is decimated and will not easily recover.

Closet poms will return to UK in droves. Wait a minute, that's not so  bad. Come on train.

The boom-bust-boom-bust cycle. The bigger the boom the bigger the bust.

Quote:
Fund manager Evy Hambro, who oversees a $US7.3 billion global mining fund for BlackRock, said it was odd the Australian dollar had remained high given weak iron ore and coal prices. “That relationship seems to be unusual, and therefore it’s likely that something is going to give. It could be that the Australian dollar weakens or that the iron ore price recovers in the near term. Our best guess is that it’s probably a little bit of both.”


I like how the pollies automatically determined that a construction boom was going to follow the mining boom as though this had been pre-determined by the higher powers Wink

Even the yanks have woken up to the roads to riches from property and have gone back to grass roots manufacturing as they try to save whats left of it. It doesn't look like that will ever happen here because we are so smart and know more than everyone else.

cheers
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In August 2021, Newcastle Coroner Karen Dilks recorded that Lisa Shaw had died “due to complications of an AstraZeneca COVID vaccination”.
 
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ian
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Re: Dollar plunge may burst our property bubble
Reply #3 - Sep 15th, 2014 at 11:42am
 
the dollar will continue to fall until the 80 cent mark. House prices will flatten as part of the normal cycle There is no property bubble.
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Re: Dollar plunge may burst our property bubble
Reply #4 - Sep 15th, 2014 at 11:51am
 
Sir lastnail wrote on Sep 14th, 2014 at 10:53pm:
Not good news for the eternal optimists here on this forum who keep telling us that only aussie house prices increase indefinitely  LOL


...

Another property bubble thread.  How many have there been so far?

Is this like the Mayan calendar thingy?

Or the milenium bug?

Or Nostradamus's end of the world quatrain....?

Cheesy
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longweekend58
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Re: Dollar plunge may burst our property bubble
Reply #5 - Sep 15th, 2014 at 11:55am
 
as someone who watches the dollar daily, the dollar has not plunged at all.  it has dropped THREE CENTS., big deal.  and the usual wankers on here are the people claiming the dollar would hit 40c.  it was as low as 86c last year and the housing didn't collapse.
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AUSSIE: "Speaking for myself, I could not care less about 298 human beings having their life snuffed out in a nano-second, or what impact that loss has on Members of their family, their parents..."
 
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Sir lastnail
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Re: Dollar plunge may burst our property bubble
Reply #6 - Sep 15th, 2014 at 4:32pm
 
longweekend58 wrote on Sep 15th, 2014 at 11:55am:
as someone who watches the dollar daily, the dollar has not plunged at all.  it has dropped THREE CENTS., big deal.  and the usual wankers on here are the people claiming the dollar would hit 40c.  it was as low as 86c last year and the housing didn't collapse.


so is the federal reserve working hard for the money it prints ? Cheesy LOL

it's great how the monetary system works. Some flunky with god like status prints money with no intrinsic value whatsoever and then has the license to lend it out to suckers at interest who work hard paying back the debt all of their life Sad
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In August 2021, Newcastle Coroner Karen Dilks recorded that Lisa Shaw had died “due to complications of an AstraZeneca COVID vaccination”.
 
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Bobby.
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Re: Dollar plunge may burst our property bubble
Reply #7 - Sep 15th, 2014 at 4:35pm
 
It's terrible news Nail.

I am watching the international value of my savings destroyed.
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longweekend58
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Re: Dollar plunge may burst our property bubble
Reply #8 - Sep 15th, 2014 at 6:24pm
 
the gay boys are such clowns.  4c drop and you are predicting disaster... again.  you'd think with a record like yours  - being wrong time and time again would slow you down but alas, only intelligent people would think like that.

absolute dunces!
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AUSSIE: "Speaking for myself, I could not care less about 298 human beings having their life snuffed out in a nano-second, or what impact that loss has on Members of their family, their parents..."
 
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Bobby.
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Re: Dollar plunge may burst our property bubble
Reply #9 - Sep 15th, 2014 at 6:54pm
 
It's gone below 90 cents


1 AUD = 0.8998 USD

https://www.google.com/finance?q=AUDUSD
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longweekend58
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Re: Dollar plunge may burst our property bubble
Reply #10 - Sep 15th, 2014 at 7:03pm
 
Bobby. wrote on Sep 15th, 2014 at 6:54pm:
It's gone below 90 cents


1 AUD = 0.8998 USD

https://www.google.com/finance?q=AUDUSD



and was 86 a few months ago and the world didn't end.  it was 47cents a decade ago and house prices were still rising.  take your face out of gaynails bum and start having your own opinions for a change.
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AUSSIE: "Speaking for myself, I could not care less about 298 human beings having their life snuffed out in a nano-second, or what impact that loss has on Members of their family, their parents..."
 
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Bobby.
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Re: Dollar plunge may burst our property bubble
Reply #11 - Sep 15th, 2014 at 7:05pm
 
longweekend58 wrote on Sep 15th, 2014 at 7:03pm:
Bobby. wrote on Sep 15th, 2014 at 6:54pm:
It's gone below 90 cents


1 AUD = 0.8998 USD

https://www.google.com/finance?q=AUDUSD



and was 86 a few months ago and the world didn't end.  it was 47cents a decade ago and house prices were still rising.  take your face out of gaynails bum and start having your own opinions for a change.


Laugh till you cry, - to Longy -
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Gizmo's lips are still sewn to your sphincter and it creates an echo when he speaks through you.



Grin Grin Grin Grin Grin
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longweekend58
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Re: Dollar plunge may burst our property bubble
Reply #12 - Sep 15th, 2014 at 7:12pm
 
Bobby. wrote on Sep 15th, 2014 at 7:05pm:
longweekend58 wrote on Sep 15th, 2014 at 7:03pm:
Bobby. wrote on Sep 15th, 2014 at 6:54pm:
It's gone below 90 cents


1 AUD = 0.8998 USD

https://www.google.com/finance?q=AUDUSD



and was 86 a few months ago and the world didn't end.  it was 47cents a decade ago and house prices were still rising.  take your face out of gaynails bum and start having your own opinions for a change.


Laugh till you cry, - to Longy -
Quote:
Gizmo's lips are still sewn to your sphincter and it creates an echo when he speaks through you.



Grin Grin Grin Grin Grin


I am sure that in your own infantile mind that seems like a clever retort. it wasn't.  even those who weren't already rolling their eyes at your every post are doing so now.
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AUSSIE: "Speaking for myself, I could not care less about 298 human beings having their life snuffed out in a nano-second, or what impact that loss has on Members of their family, their parents..."
 
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John Smith
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Re: Dollar plunge may burst our property bubble
Reply #13 - Sep 15th, 2014 at 7:15pm
 
its always the same characters starting the property bubble threads ... get over it. No matter how much you wish it so, it just isn't going to happen.
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Our esteemed leader:
I hope that bitch who was running their brothels for them gets raped with a cactus.
 
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John Smith
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Re: Dollar plunge may burst our property bubble
Reply #14 - Sep 15th, 2014 at 7:16pm
 
longweekend58 wrote on Sep 15th, 2014 at 7:12pm:
Bobby. wrote on Sep 15th, 2014 at 7:05pm:
longweekend58 wrote on Sep 15th, 2014 at 7:03pm:
Bobby. wrote on Sep 15th, 2014 at 6:54pm:
It's gone below 90 cents


1 AUD = 0.8998 USD

https://www.google.com/finance?q=AUDUSD



and was 86 a few months ago and the world didn't end.  it was 47cents a decade ago and house prices were still rising.  take your face out of gaynails bum and start having your own opinions for a change.


Laugh till you cry, - to Longy -
Quote:
Gizmo's lips are still sewn to your sphincter and it creates an echo when he speaks through you.



Grin Grin Grin Grin Grin


I am sure that in your own infantile mind that seems like a clever retort. it wasn't.  even those who weren't already rolling their eyes at your every post are doing so now.


actually, it was pretty clever ...  Grin Grin
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Our esteemed leader:
I hope that bitch who was running their brothels for them gets raped with a cactus.
 
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