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Bullshark

Is the party over?

14 posts in this topic

Interesting but accurate way to describe the Australian property market, has a dig a Joye, references Keen - kind of a fun read for a Monday morning...

Everyone loves a party and Australia threw one of the biggest parties in history.

Australia's wholesale liqueur central distributor (widely known as the "RBA") should have taken away the punch long ago, but as in the US (and everywhere else), the central distributor as well as government officials and street vendors, all love a party, and what a long street party it was!

After years of partying, party goers got more than a bit tipsy, especially after government officials spiked the punch hoping to keep the street party going perpetually. Out of fear of being blamed for a massive hangover, the central distributor hiked the price of punch repeatedly hoping for a quiet end to the party.

However, the central distributor's rate hike message was ignored for over a year, primarily because the punch distributor kept insisting "there is no bubble in partying". New party goers heard the message and came rushing in chanting the slogan "better party before it's too late".

Various media outlets and party sponsors mocked one "keen" non-party goer who was too busy mountain climbing to party. Everyone else was cheering the party that had "too many fundamentals to ever end"

Meanwhile, the group of bar owners and bartenders known as the “Big Four” were forced to pass along the central distributor's price hikes. Nonetheless, the masses kept drinking and partying. It was quite the spike government officials threw into the punch!

In an act of desperation, the “Big Four” bar owners finally raised prices even more than the wholesale liqueur distributor. They did this after becoming worried about the consequences of drunks passing out on the floor, in the street, and in the outback, unable to pay their "bar tabs".

More, much more to be read here: MISH'S Global Economic Trend Analysis

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And those few individuals that didn't party hard. Those few individuals that still have change in their pockets. They will have the best choice and be able to get pissed good and proper when the big 4 bars open their doors again.

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Mish forgot to mention the people with Alcoholic Poisoning.

Some of the symptoms seem very familiar to current home owners.

The following represent other alcohol poisoning symptoms and signs and alcohol poisoning effects:

* Absent reflexes

* Slurred speech

* No withdrawal from painful stimuli (for instance from pinching)

* Confusion

* Difficulty awakening the person

* Erratic behavior

* Seizures

* Feeling very ill including long, drawn-out vomiting

* Slow, shallow, or irregular breathing

* Blue-tinged skin or pale skin

* Inability to make eye contact or sustain a conversation

* Unconsciousness (passing out)

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And those few individuals that didn't party hard. Those few individuals that still have change in their pockets. They will have the best choice and be able to get pissed good and proper when the big 4 bars open their doors again.

more like when everyone wakes up with hangovers, the hat will be passed around to recover someof the debt, doors of those who didnt party, and still have money, will be knocked on 1st.

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more like when everyone wakes up with hangovers, the hat will be passed around to recover someof the debt, doors of those who didnt party, and still have money, will be knocked on 1st.

i'm getting a deadlock and one of those eye spy things in the door

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In the wake of a massive hangover, a group of party goers aptly named the Green Party, as well as various government officials and local businesses are hoping to revive the street party, as is the vocal rock band R.E. Agents, hoping to capitalize on another party tune.

huh?

What have I missed? What are the Greens doing to revive our bubble?

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Just found it on another site.

One interesting comment is the likely response to those who supply the funding to Australia which would be to wind back lending if the funds cannot be lent out at a sufficient spread.

The trouble is can you imagine what our government would do? They would likely create a new central bank who loans out unlimited amounts of money to lenders at below the OCR just to keep that credit flowing.

Their is a massive risk in adopting such a policy. If you go to the UK where some individual contracts were signed on the basis of tracking the OCR these loans make the banks absolutely heammorage when conditions change. A government mandated spread from OCR is ludicrous.

Imagine if we get a double dip, we get OCR's this time approach 1% what do you think the spreads will be then? FFS we would send every bank in Australia to the wall within 6 months. Or would we change the legislation again then?

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If the govt took out mortgage lending at $13B A MONTH (current numbers) we will be Greece by next Christmas, Ireland shortly after. Civil war by Christmas 2012.

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If the govt took out mortgage lending at $13B A MONTH (current numbers) we will be Greece by next Christmas, Ireland shortly after. Civil war by Christmas 2012.

The sad thing is it is position neutral. They would be borrowing to lend it out so nett government debt would remain at acceptable levels, scarily this could go on for some years I fear.

The problem is of course the risks to the downside are enormous and then when our housing market falters as you say a Greek scenario will be on the cards.

What really upsets me is that we are going through a nearly unprecendented opportunity to build this country into something great and yet our government is trying it's little heart out to put us in a position that will resemble a house of cards when it all goes pear shaped... Why not let the housing market collapse now while we have other things going for us is a question I often ask myself? I know we would quite likely have a recession but at least the mining industry would power through with the investment that brings. Instead we wait for destruction to be wrought upon us when this minerals cycle turns full circle and then we will say, well who saw that coming...

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If we use the equity off debt as equity pyramid (my home equity buys two deposits, that equity then buys 4 etc) and then the car loans, Hardly Normal etc off the equity pyramid, we could be talking trillions, Tom.

Mad Max stuff.

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If we use the equity off debt as equity pyramid (my home equity buys two deposits, that equity then buys 4 etc) and then the car loans, Hardly Normal etc off the equity pyramid, we could be talking trillions, Tom.

Mad Max stuff.

For sure.

The government basically becomes a bank themselves. They would have their loan assets and their deposit liabilities. The position would be positive till the sh*t hits the fan on the loan assets and then the measley capital suddenly looks like a small pimple compared to the total deposit liabilities. Trouble is the Australian community has substantial capital at its disposal whether it be revenue raised through taxation or by other means. Does this mean its a good idea. Of course not. Does this mean they are going to do it? Looks suspiciously like it at the moment.

Cut exit fees; Non banks say this is not the answer.

Raise RMBS; some non banks lenders say this will not be enough.

Set interest rates at a standard above OCR. Less volume of lending.

government sources funds actively on the international market or guarantees banks and NBL to do same will tick all the boxes for both banks and NBL's. They will end up saying after a whole lot of deliberation with industry this is the best solution going forward.

What does this mean for Australia? Rather than a strong position at the end of a mining boom we will be as weak as piss. People will laugh about how we were able to do it. At least the Irish had nothing going for them, and made a fist out of it for a few years. We have massive mineral wealth and at the end we will look like the fool who bought the magic beans to find the goose died years before.

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It's all for the better (from a bearish POV).

They can make laws to restrict IRs, they can make laws about exit fees. One thing they cant make laws for - availablity of funds to everyone. When funds are restricted to lower IRs and other terms there would be less funds available.

Please tell me the number of families hunting for a house on the North Shore with 1+ Mil in cash. Not many. Restrict borrowing by making laws, prices will crash immediately, not within months, within weeks!

PS - I always suspected the greens to be reds.

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Isn't it a case of the overseas funding becoming more expensive due to the government guarantee on wholesale funding lapsing. I don't mean to sound cynical but I imagine if combined with this the banks could source funding at lower rates relative to the ocr (higher but not as high as now) than they are now. The talk of bubbles among overseas bond investors goes away for a time till the government starts to look like being a default risk which in my opinion is a fair way off the current state of play?

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