Posts Tagged ‘debt’

Australian Housing Disinformation

March 27, 2009 Leave a comment
Know Thy Banker

Know Thy Banker

A short note today on the difference between the RBA’s comments on the stability and durability of the housing market and, well, reality:

The Reserve Bank said Australian banks had been able to concentrate on profitable and relatively safe domestic lending to households over the past decade. They had not lent heavily abroad, where risks are higher, and they had avoided exposure to securities, such as collateralised debt obligations, that have brought such heavy losses to other banks.

How can they pretend that Australian household incomes are immune from international events? The difference between foreclosures on Australian mortgages and those overseas is one of timing and not necessarily magnitude. Claiming that we will survive this worldwide depression like we survived the other, smaller recessions, is nothing more than a random statement. Nobody really knows that.

It’s no secret that the New Zealand economy is in a terrible recession, and everyone is aware of the economic collapse in Ireland, Iceland, Eastern Europe and, it appears, even the United Kingdom. It’s now official news that Australian wealth fell by as much as 38% over the past twelve months. Unemployment is already rising and there is no evidence to support the notion that the trend won’t continue.

If we separate opinion from fact in all of this, we can see that the RBA has plenty of opinion but not much fact behind its confidence in Australia’s real estate market survivability. At the very least, the RBA is tight-lipped on how it arrives at its optimism.

Part of this optimism may come from Chinese investment into Australia which is a particularly smelly bucket of fish:

Market insiders believe China is buying 15 to 20 per cent of the $2 billion in Treasury securities being issued every week.

This would make China the single biggest lender to Australia, although details of who owns the bonds are cloaked in secrecy.

The program, authorised by Treasurer Wayne Swan, will leave Australia with a debt bill approaching $200 billion.

Our Government is playing a very dangerous game in doing so, and any assumption that China won’t want its pound of flesh in return would be foolish indeed. In a way, all this is a bit like taking out a mortgage to buy the kids a Playstation, a swimming pool, and some other expensive entertainment thingies, all in the face of impending unemployment. Hey, we might be lucky and not get unemployed!

Can this all be a reason to hope that real estate prices in Australia won’t fall? It cannot be, because ultimately, borrowed money has to be paid back and the artificial propping up of Australian living standards through foreign debt is not sustainable, even in the medium term, because economic resurgence has not yet occurred anywhere in the world. The stock market rally in the US is not to be taken seriously, as there is no fundamental reason behind it. Where are the glowing US trade figures? Where is the news of factories reopening, or of a jump in forward orders for commodities?

Australia is only in the early phase of the economic storm. Good economic news that is not based on indisputable fact should be considered to be nothing more than disinformation.


Who said there is no truth in Pravda?

March 20, 2009 Leave a comment

Uncle SamuelAn article appeared today in entitled: “USA has two options to save its economy: declare default or trigger off war”:

Inga Foksha, an analyst with Aton Investment Company, agrees that the US default is quite possible, although she is certain that it will not happen unless the world finds an alternative to the US dollar. The dollar will collapse immediately in case of default, which is absolutely unacceptable, because 63 percent of world reserves are saved in dollars. Their collapse will trigger the global economic collapse.

While the analysis is quite good, they have the title wrong. It should read:

The USA has but one option: declare default and trigger off war.

The US Dollar, as a fiat currency, is on track to losing all credibility. The United States of America is already practically bankrupt. And since “63 percent of world reserves are saved in dollars”, the Federal Reserve’s action to dilute the value of the dollar by issuing irrational amounts of new money without any kind of capital to back it up will act to offend the holders of that 63 percent. Anyone who thinks it will all be taken lying down is kidding himself.

Categories: Finance, Government, War Tags: , , , ,

This is the time to return to Christ

March 20, 2009 2 comments

Ss Monique and AugustinBetter is the poor man walking in his simplicity, than the rich in crooked ways. He that keepeth the law is a wise son: but he that feedeth gluttons, shameth his father. He that heapeth together riches by usury and loan, gathereth them for him that will be bountiful to the poor. He that turneth away his ears from hearing the law, his prayer shall be as abomination. He that deceiveth the just in a wicked way, shall fall in his own destruction: and the upright shall possess his goods.

The road to Christ, the road to Perfection, is up hill. It’s not easy. Indeed, for most it is an almost constant battle which seems to be lost more often than it is won. The problem is that the whole world is against you. On the other hand, if the whole world is against you, be encouraged as you are probably on the right track.

In Western countries, Traditional Catholics (and Christians in general) are offered a unique opportunity at this time to clean up the way they live, to clean up the problems in their life. Of course, your local priest will tell you that the opportunity is always there, but we all know that most of the time it’s extremely difficult to throw off old habits and change how we live. Tomorrow is always easier.

There are several things that many Christians are guilty of. The time to fix them is now:


If you are in debt to a bank, then you are participating in the sin of usury.

Interest rates are at historical lows. Banks are being inadvertently kind and generous to those who owe money. The intention of the low interest rates is to sell new loans and to encourage money to slosh around in the economy so that the usual consumerism and profiteering may continue as it did in the good old days.

The problem is that it won’t work. The Federal Reserve can see this and has already taken the step of printing money. This will lead to inflation and very high interest rates. Expect rates for mortgages reaching 20% in the near future. If it doesn’t happen, well and good, but the way things are going, it will.

Use the low interest period to your advantage, which will perhaps last a year, or two at best. Save your money and pay off your debt. Get out of debt altogether if you possibly can, and make a promise never to borrow again.


Rising prices of food are said to be responsible for the “obesity epidemic”. Fresh food has always been more expensive than processed food, because it is produced from lower quality ingredients, has a longer shelf life and is easier to transport. People whose economic conditions deteriorate tend to become depressed and this leads them to go for rapid reward food such as that offered at fast food chains.

Stop going to Mac Donald’s for your meals. Stop buying rubbish food to cook for your family.

If you buy better food, you will feel better, sleep better, think better. This will make you more productive during the day and leave you better equipped to fight your various vices.

If you feel better, you will find it easier to be more physically active. This will make you perform better at work and home. You therefore improve your chances of economic survival.

Self Perversion

This vice concerns the voluntary, self inflicted brainwashing that people are doing to themselves everywhere, every day.

Stop reading glossy fashion and lifestyle magazines.

Stop watching television. Get rid of your television.

Stop surfing the Internet aimlessly.

Basically, only use technology for gainful purposes. If you want to relax, read a good book. It doesn’t need batteries, it works in full sunlight, it doesn’t make annoying noises and makes you look intelligent. Most modern technological devices are now designed to be all-in-one entertainment solutions. Their functional use has rarely improved much (such as for a mobile phone), and sales of new gadgets of the same class of item tend to be based on added distractions.

The time is coming when many of the “traps” which typically ensnare Christians into habitual sin, will do more than stain their souls. The temporal freedom of everyone is coming under serious threat as a result of the global economic crisis. Those who have not given themselves entirely to modern ideologies will be noticing this already. New types of discrimination are emerging, where good, otherwise well meaning and generally innocent people are caught out on technicalities and lose their freedom. These are the early signs of a new tyranny.

The best survival approach is as above. Clean up your life. Aim for economic efficiency, functionality and prudence in your personal and family life. Avoid unnecessary use of technology, eat properly and immerse your free time in addictions (hobbies) which do you good rather than harm.

Further Proof of Impending Real Estate Crash in Australia

March 17, 2009 1 comment

Some people will buy anything.

ABC News (Australia) reports:

The Newcastle University index projects 15 per cent of the suburbs examined are at a significant risk of sliding into high levels of unemployment. … “Because of the reliance on particular type of industries; manufacturing, construction and those types of industries,”

It’s not unexpected. It is just a matter of time before unemployment hits Australia with people defaulting on mortgages and going back from being “owners” to “renters”. For most people, not a great deal changes in terms of their de facto serfdom. They go from renting from a bank to renting from a property investor. After all, only 34% of homes are owned out-right. It is a very ominous statistic indeed.

Soon will be the time when the cashed-up individuals who got out of the stock market before its crash will get rid of much of their spare money in buying up cheap houses throughout Melbourne and Sydney’s working class suburbs. Housing prices in these areas are set to fall sharply, as will rent (because the capacity to pay will be low).

There are other major changes taking place, with the previously highly paid mining workforce returning from mining towns in the western parts of Australia to the Eastern belt of cities. These people will also find themselves unable to find work. They will crowd out temporary residents from many areas of employment which will result in them returning to their countries of origin. The difference is that these people are more likely to be “cashed up” and are unlikely to be in the situation of defaulting on mortgages or being forced to rent. How this will affect housing demand or rental prices is uncertain, but it could turn out to be a buffer against a cataclysmic housing price collapse.

On balance, however, I would guess that, in poorer parts of big cities, housing prices will fall dramatically as the desire to live in those areas vanishes, dragging the market down as a whole. Many up-market areas will also suffer as businesses go to the wall. Again, not unexpected. Top-end real estate has always been the most volatile.

However, farming and the food production industry is an area whose produce is not experiencing any dip in demand. People still have to eat. It is in areas which service these needs where I would think that real estate prices won’t fall much at all. Country towns and regions where food processing takes place, one would think, should be relatively immune from what is otherwise an manufacturing and minerals export slump for Australia.

Everything Will Be All Right

February 25, 2009 Leave a comment

successlargeHere are some thoughts, based on and loosely translated from an article by Dalius ex memel:

The financial system is a clever human invention indeed, yet it is an illusion. How can the cost of company shares change by fifteen-fold? Is this natural? No. It is an Illusion, a Sham.

Finance and Economics are two distinct entities. Economy is a natural process: One sows seeds (invests), grows them, looks after the plants (control of investment), and finally reaps the harvest (collection of dividends). This is true Economics.

The Financial system, in contrast, is an illusion and a sham by design. In general, the fluctuation in share prices occurs as a result of human sentiment and market manipulation. It is not based on fundamental worth. The system is unnatural. We invest in the unfounded belief that demand for shares will inevitably rise, from which we may profit.

The individual should make his own investment decisions and never assume that others will invest with more care or with a greater sense of responsibility than himself. Make your own investments, control and watch them yourself. If you do so, you will escape the illusion that so many have fallen for at their peril, whose hard earned money has been whittled away.

Don’t trust others with your money, as you would not entrust others with your other responsibilities, such as your family duties, your profession or trade, your hobbies, etc.

Nobody is buying Real Estate at the moment, yet around the world the prices are looking very low and there are many interesting choices…

However, do not sell a valuable asset (land/housing) at a ridiculously low price if it was bought at a high one. It really isn’t worth it.

Those who are selling such assets currently have good reasons:

  1. Divorce
  2. Death
  3. Debt to the Bank
  4. Loss of income

If you have to sell because of one of these, and you are really worried about your future, then do so, and accept our sincerest well wishes.

You may find yourself in such a situation, where you are living beyond your means, having fears of the immediate future. Perhaps you are finding your health deteriorating, or you are finding your debts to the bank becoming unmanageable. This can’t be an easy life, and what is more you probably have a family to support, so here is a way out:

Start your own company – do that which you have always wanted to do. Now is the time of opportunity to start building a business based on the things which you know most about. Pursue your dream. It’s possible to get things moving at half the price that it cost even two years ago. Consider employing members of your own family, so that you don’t need to hire staff. Your office can be run from home, or with the retail real estate market in the shape that it is in, renting an office is probably looking quite cheap at the moment.

Eliminate your debt to the bank, perhaps by moving to humbler living quarters in a better location, such as in the city center. Once you have your affairs in order, you will find such an investment much easier to sell. You will maintain liquidity in any market, as there will always be people wishing to live there. If your family is large, then an option might be to lease out the city apartment and rent something cheap that will accommodate your needs.

Secure your basic resources, such as water, basic medicines (especially natural medicines), food and energy. In the coming few years these basic things are likely to be in short supply and you may be caught out with the masses. Make a list of these basic requirements and base your shopping on them. Have something of a stockpile. You will save time and money.

Spend time making contacts and keeping friendships alive, so that you can form your closed circle, with which you will feel safe. Just as family life needs love and care, so do outside relationships. Join social groups which match your personality and interests. Use your free time constructively.

Educate yourself and your family from classical/traditional sources and teachers. Read good books, look at positive and wholesome films. Don’t watch television and stop reading meaningless magazines full of gossip, or the same news over and over again. A basic understanding of world events is enough, so that you can at least conduct a meaningful conversation on such things, without losing yourself in detail. World news and politics can be a very useful thing to have deep knowledge of, only if it ultimately serves to change what you do with your life. Beyond that, it is a waste of time. In times of change and crisis, many become news junkies, addicted to bad news and thinking they are getting something out of it by telling everyone else the sensational bits. It’s actually no help to anyone.

Arm yourself with patience and inner peace. After the coldest Winter comes the sunshine of Spring. So, after the coming times of hardship will follow better times. Patience is an art and a skill that can be learned. Nurture and develop it in yourself. Time is your friend.

The future will be brighter, if you think carefully about your principles and are clear about your priorities. Concentrate on the tasks at hand, and not about the worries around you over which you have no influence.

Do things with conviction, as though it were a life or death struggle, and you will find success.

Good luck!

Categories: Finance Tags: , , , ,

A Visit to the Banker Manager’s Office.

February 23, 2009 Leave a comment

no_dollar_beggarLike an unemployed man’s wife, Hilary Clinton has made her way to the Bank Manager (China) to beg for leniency on non-payment on the mortgage.

“Because our economies are so intertwined the Chinese know that in order to start exporting again to its biggest market, the United States had to take some very drastic measures with this stimulus package,” Clinton said.

In other words, the furniture has been sold and they have promised to pay the baker, the butcher and the milkman. With money, of course. The sons sit idle, illiterate and unskilled. The daughters are already working the street corners and public houses in the town but it just isn’t making ends meet.

As she walks into the bank, all dolled up, the bank clerks eye the woman with hatred and jealousy. They all talk amongst themselves. One of the secretaries knows about the Banker and tries to wave her hands at the woman to tell her of the dangers, but the woman is very quickly intercepted at the door and ushered to the waiting room.

The Banker is looking at the books and can see that foreclosure is on the cards. He invites the woman into his office.

“Lend me a bit more” pleads the woman, “my daughters will work harder and my sons promise to learn to read”. The Banker just leaned back and smiled.

The US secretary of state had said on Saturday after meetings with China’s leaders that Beijing was still confident in US Treasury bonds and expressed Washington’s appreciation for the investments.

So said the woman as she adjusted her blouse and redid the strap on her high heels. She stumbled out of the manager’s office hurriedly.

But everybody could sense what really happened in the Banker’s office.

Categories: Finance, Government Tags: , , ,

Lynching Loathsome, Licentious Loansharks

February 14, 2009 Leave a comment

Ship WreckThe Times Online expresses its fears of civil unrest in the United Kingdom arising from the ever escalating financial crisis. It’s all believable, what with a record budget deficit, collapsing exports, escalating unemployment, astronomical personal debt levels and the real possibility of further bank failures.

Some of the comments made to the original article point out what the public might be thinking:

Yes, we all hate bankers — but replace them with what? If the ideology of capitalism is discredited, the alternative — socialism — collapsed in 1989. So we are now left without any ideas at all. Which is why everyone is running around like headless chickens.

A narrow-minded comment, as there are surely more than two ideologies in the world. The ideology of capitalism is not discredited but would have been working perfectly had it been allowed to. If life were a game, then the reason why people are losing at it is because they weren’t told the rules and the others are cheating. The most likely mistake that people have made is to neglect the most basic question to ask when investing:

What is a risk, what is a gamble and what is plain stupid?

A risk is taken by an investor when he is certain of the maximum gain and maximum loss that may occur, that the benefit probably outweighs the potential loss, and is hopeful that he will get the maximum return. Any future investment plans are made, depending on their priority, on what is certain, probable or hopeful. In following this principle, the investor would have known not to trust “financial instruments” as a “certainty”, for example.

A gamble is taken when the investor considers the potential loss to be 100% (or has no idea), and believes that the maximum gain is probable (but he cannot quantify this probability). No risk vs. benefit analysis can be reasonably taken, no plans can be based on the projected outcome because there is nothing that can be done with zero money.

Plain stupid is the investor who thinks everything is a risk when most of the time it is a gamble. Banks were in a position of having so much money, so many people’s deposits, that they lost all sense of risk vs. gamble. They gambled all over the place. This has happened, particularly in the UK, because of the absence of a real meritocracy. Stupid people became CEO’s on the basis of club memberships and family associations. The same phenomenon exists all the way down the management chain. Arrogant and afraid of being shown up, the decision makers ignored sound advice, departed from concrete principles and sailed the navy of fools straight towards a reef.

The reason people are such suckers at this time is that they have too much faith and no Faith. The ancient wisdom contained in traditional religion would have saved the skins of many, had they applied it. Building a house on a rock is about more than architecture. Keeping one’s affairs tidy as though it were the last day has greater meaning than attending confession regularly and saying one’s prayers. The thought that God is watching our every thought and act is about more than the supernatural world. It is an aide to proper conduct in times of chaos and lawlessness. The prosperity of previous generations was built on this kind of sound reasoning.

In the absence of this time-proven wisdom, people turn to men in fancy suits for their dose of religion. Instead of believing in angels and saints (an altogether harmless undertaking) they believed in money and bankers. Instead of betting on real horses at the races, where one can at least take a bit of a look at the horse and see if it is limping or, perhaps not even a horse, they gambled on the hearsay of a financial advisor and his pie charts, bar graphs and trend analysis.

In any case, it’s all done now.

It would be nice if there wasn’t a bloody solution to all of this mess, but if people aren’t willing to turn away from the emptiness and the lies that got them to this point, then blood and death is the inevitable way out. The reason there is so little hope for the likes of the United Kingdom and the USA is that, by and large, people are not the decent sort that their grandparents were. They keep telling themselves that the reason their grandparents don’t swear but behave civilly towards each other is on account of their age. They don’t realize that it was because their grandparents were better cultured. And now the older generation is gracefully moving on.

The greatest pity is that the current generation has altogether broken its link with the past and remains adrift in a sea of lies with fools at the helm. A shipwreck is all that can come of it.