Housing Crisis in Australia

[tw]

Originally Posted by lushchocolateswirl

Well thanks for the answers but I think you all know where I'm coming from. Once people used to save up and buy their first 'home'.
But the trend over the last twenty years is to save up and buy your first 'investment'.

Nobody invests in something where the monthly costs increase from an affordable $800 to an unaffordable $2000. But when the 'investor' is not investing - is instead looking for something at a magical discount - then people sign for ARMs and praise the party in power for making it possible. They are not investing. They were doing what was encouraged at the highest levels of finance and government.

This 'free money' was not possible when loan companies had to worry about the 'quality' of their clients. NINJA. No Income No Job Apparent. Once loan companies were all but required to know such facts. Now we have a money game. Everyone involved was not investing. Everyone saw free money; including the George Jr tax cut. When does economics take revenge on an economy playing money games? In 1968 and 1970, Nixon was doing just that complete with lower interest rates. So in 1976 and 1979, economics took revenge. Deja vue.

In the late 1920s, a 'free money' mentality took hold. An early symptom of that revenge was in 1928 - a stock market crash. When did a Great Depression finally take revenge? Early 1930s. Deja vue. We must now pay for money games such as George Jr's tax cut, ignoring the reasons why Enron, et al occured, a war that is not even in the Federal Budget, a massive dependence on China, et al to finance our debt, and so many wacko extremists who both created this problem and would now blame it on anything but them.

It's silly to blame homeowners for doing only what people at highest levels wanted them to do and who encouraged it by massive "economic mismanagement". That's not my phrase. That phrase is what others in the world are blaming this on.

Let's see. George Jr's people said "Mission Accomplished" would only cost $2 billion and would be paid for by oil revenues. Worst case estimate posted here was $400 billion. I was wrong. Those costs have far exceeded even my expectations. Cheney said, "Reagan proved that deficits don't matter". Therefore there is no finanical market crisis? When does economics take revenge for economic lying?

Well his father fought a war that America did not pay for. George Sr's liberation of Kuwait was paid for by the world. How curious that one man can be so smart - and the son be so stupid. But then some will instead blame symptoms on greedy homeowners? And the S&L crisis was also created by the greedy consumers? Nonsense. Congress passed laws that made the S&L crisis possible - removed any requirements for responsible fiancial transactions - even after being properly warned.

To see these problems, start with those who created the money games. Even after Enron, the extremists in power refused to fix accounting fraud. NINJA - if you don't understand why, then you have no idea who to blame.

[lushchocolateswirl]

Nobody invests in something where the monthly costs increase from an affordable $800 to an unaffordable $2000. But when the 'investor' is not investing - is instead looking for something at a magical discount - then people sign for ARMs and praise the party in power for making it possible. They are not investing. They were doing what was encouraged at the highest levels of finance and government.

That's what I said diddle I?

[tw]

Originally Posted by lushchocolateswirl

That's what I said diddle I?

Why ask a question that only you can answer?

Nobody said you did or did not say anything. For a second reason, why the question that nobody else can answer?

[lushchocolateswirl]

I don't think it's silly to blame homeowners at all. IMHO if you listen to a bank you're a bit of a dill. It's like trusting a politician.

We'll be having three rate rises before june this year. The first one has just happened. If people havent factored in fluctuations in the market then they have no business in receiving a loan. The banks arent going to help you, so it is left up to the individual to work things out for themselves
But hey what do I know, I don't own a mobile phone nor an answering machine nor any credit cards. Ha, maybe that makes me a Hick but I'm not about to lose my home nor any of my pocessions because a bank told me a lie. They didn't tell me a lie because i didnt' listen to them in the first place.
People can blame the big banks all they wish, but when it comes down to it, it was their individual choice.

[tw]

Originally Posted by lushchocolateswirl

People can blame the big banks all they wish, but when it comes down to it, it was their individual choice.

Maybe the problem is in "what is it?" Yes, a homeowner who applied for an ARM with interest rates he could not afford is 100% responsible for his fiasco. But that is a trivial problem. We have a recession resulting in inflation, job losses, or stagflation that will adversely affect every one. The homeowner did not create that. Financial mismanagement did.

Whereas one home loan default is directly traceable to one party of that contract; the bigger economic problem is directly traceable to the other party to that (and other) contract.

You can only blame the homeowner for his mortgage default. The major economic crisis - a more significant problem - is directly traceable to the finance industry that is even still doing fraudulent (Enron style) accounting and 'creative financing'.

Appreciate that there is no 'blame' relationship between foolish homeowners and the others who invented / offered this 'creative financing'. Each is 100% guilty for their side of each contract. Blaming the mortgage applicant does not exonerate anyone else.

[classicman]

Everything is bad - the sky is fallin .....run hide....

[smoothmoniker]

Everything is bad - the sky is fallin' ... buy Ultrashort Exchange Traded Funds.

[xoxoxoBruce]

Following the problems in the sub-prime lending market in America uncertainty has now hit Japan, in the last 7 days: Origami Bank has folded, Sumo Bank has gone belly up, Bonsai Bank announced plans to cut some of its branches, Karaoke Bank is up for sale and will likely go for a song, Shares in Kamikaze Bank were suspended after they nose-dived, 500 staff at Karate Bank got the chop, and analysts report that there is something fishy going on at Sushi Bank where it is feared that clients and staff may get a raw deal.

[classicman]

lol @ xob

[lookout123]

Originally Posted by smoothmoniker

Everything is bad - the sky is fallin' ... buy Ultrashort Exchange Traded Funds.

Watch those very very closely. Those are meant for traders, not investors.

[smoothmoniker]

Yeah, I've never really understood it when financial advisers say that. By looking at market conditions and realizing that things were going to go south, I invested heavily in ultrashort ETFs back in October (I like this one in particular: UltraShort S&P 500). I'm up 25% on my investment since then.

That's a 25% gain on capital in 4 months. How is that not an "investment" move?

[hauystore]

In Holland (where there are huge housing problems and it is extremely difficult for starters to buy a hous), it is 50% of your income.

[Clodfobble]

Originally Posted by smoothmoniker

That's a 25% gain on capital in 4 months. How is that not an "investment" move?

Because in theory it would be just as easy to drop 50% in a month as well?

[smoothmoniker]

That's true of absolutely every meaningful investment. You are being paid to compensate for the risk of loss.

And, that's what stop loss sell orders are for.

[glatt]

My wife was just talking with some other parents at a little get together yesterday, and the discussion turned to putting additions on houses. One of the people mentioned that her friend is now paying over 70% of the family income on housing.

So this was my wife's friend's friend. I'm only 3 degrees of separation away from someone paying 70%, and now now all of you are 4 degrees away.