Australian (ASX) Stock Market Forum

Credit Debacle the start of an imminent Recession

Joined
15 July 2006
Posts
3,746
Reactions
11
Those of us in the know have a duty to warn our family and friends and anyone we can to prepare for the tough times ahead, pull in the belts and relinquish debt if we can. .
I like this "those of us in the know" bit. It assumes you are 100% right. What if you are 100% wrong then you are a lemming. Hitler thought he was right. So has every Prime minister I have seen in a long life time. I, for one don't agree. I guess then that according to you then I am not in the know. Remember the definition of expert. X is something that was, a spurt is a drip out of control.Therefore an expert is a drip out of control.
 

explod

explod
Joined
4 March 2007
Posts
7,291
Reactions
1,052
I like this "those of us in the know" bit. It assumes you are 100% right. What if you are 100% wrong then you are a lemming. Hitler thought he was right. So has every Prime minister I have seen in a long life time. I, for one don't agree. I guess then that according to you then I am not in the know. Remember the definition of expert. X is something that was, a spurt is a drip out of control.Therefore an expert is a drip out of control.

I personally know family and friends who have borrowed to the hilt for their bit of Aussie property and the BMW, beyond redemptive value. Some have a number of investment properties in the same boat. Any rise in interest rates, fuel and food is going to take them out. With a world shortage of these essentials is this not going to bite. It is happending across the US as we discuss. If that is not roughly in the know, what is?

And if we have some idea, should we not be warning our friends and families of these dangers or just say "stay positive, things will be ok" as Wall Street is so doing with their heads in the sand. Maybe they are in touch with the guardian angel. Wont' work for us drips out of control though

Just my humble opinion
 
Joined
15 July 2006
Posts
3,746
Reactions
11
I personally know family and friends who have borrowed to the hilt for their bit of Aussie property and the BMW, beyond redemptive value. Some have a number of investment properties in the same boat. Any rise in interest rates, fuel and food is going to take them out. With a world shortage of these essentials is this not going to bite. It is happending across the US as we discuss. If that is not roughly in the know, what is?

And if we have some idea, should we not be warning our friends and families of these dangers or just say "stay positive, things will be ok" as Wall Street is so doing with their heads in the sand. Maybe they are in touch with the guardian angel. Wont' work for us drips out of control though

Just my humble opinion
Anyone buying a BMW with borrowed funds or borrowing for investment should be enough in the know to allow for these things. If not then they are the drips out of control. A good motto is "neither a borrower or a lender be".
 

robots

hello
Joined
17 November 2005
Posts
2,873
Reactions
0
hello,

http://www.tradingroom.com.au/news_research/index.jsp?page=aap_article.jsp&id=139646

looks like a poor decision on the part from Basis Capital, just like Explod friends & families may make a poor decision by over committing

sure warn them

but keep in mind these CDO or securitized products have lost their value, they have been re-rated

as an example your car goes from 40k in value to 20k in value in say 3-yrs, theses CDO's have gone from 4 bil to 1 mil overnight, some have called it a Ponzi scheme and its becoming more apparent it just may be

interest rates aren't being lifted because we are in a recession!

thankyou

robots
 
Joined
13 November 2006
Posts
701
Reactions
0
I think there are so many facets to this story nobody really knows whats going to happen. I have a few questions points I would like to raise.

1. "700 Mill of Arms about to adjust" : This 700mill is less than 10% of the total market in the US and of these arms not all of them will fall over.

2. The ability of people to pay their loans as interest rates go up requires JOBS and wage increases which in Aus is the case (hopefully labour won't change that).

3. I think non home load debt could be more of a concern to countries other than the US.

4. The housing market is driven by demand. in aus we are restricted by available and useable land with a still growing economy and population. Thus creating demand. Land is also hard to come by in Europe and UK where house prices are stable.

5. The US is a huge place where land in many areas been very cheap and readily available (large urban centres can be the exception).

6. Big businesses still seem to have enough cash flowing in from sales to acquire businesses and grow without borrowing huge amounts of cash eg woolies, BHP etc.

This brings me to the water in the boat analogy. Sure they are applying bandaid fix now buts thats because they can't afford the fix. If they address the problems in the economy namely China's hugely undervalued cash, trade deficit etc then maybe they can afford to allow corrections to take their coarse when they are economically on a stronger foot?
 

explod

explod
Joined
4 March 2007
Posts
7,291
Reactions
1,052
Anyone buying a BMW with borrowed funds or borrowing for investment should be enough in the know to allow for these things. If not then they are the drips out of control. A good motto is "neither a borrower or a lender be".

That is exactly what too much optimism has done to many people who's education,over 50 years, has come primarily from sitting in front of a television set. The great consumer society is the norm I am afraid. Suppose we cannot help the helpless. Thought is was worth talking about though.

Who made the drips in the first place. Twenty years ago the world wanted deregulation, after the blame game ends it will be interesting to see the new direction of Government control after the horse has well bolted.
 
Joined
15 July 2006
Posts
3,746
Reactions
11
6. Big businesses still seem to have enough cash flowing in from sales to aquire businesses and grow without borrowing huge amounts of cash eg woolies, BHP etc.?

Woolies have the answer to borrowing. They sell for cash goods which have a fast turnover, almost daily, yet they stretch payments to suppliers an average of around 57 days. Multiply their daily turnover by at least 45 and that is the amount of free funds they work with. I used to supply woolies but gave up in disgust. Coles were much better and that is why they haven't been able to match woolies. That I believe is changing.
They use their bargaining power to get a good deal on rent so they have little need to borrow for capital outlays.
It is the suppliers to woolies and coles who will be feeling the pinch and go under unless they find other outlets.
 
Joined
13 November 2006
Posts
701
Reactions
0
Yeah i have heard about their dodgy practices. The crazy thing is they are bringing out their own credit card next year:eek:

My point was that The US economy is Huge and the subprime CDO's make up a tiny part of the whole economy.

Look at the big defence, oil and mining firms they keep posting huge profits which i can't see been effected by this. Plus they have a massive agricultural industry with heaps of wheat etc. I feel that if the Chinese currency went higher their manufacturing base would start to grow again.

I think their Auto industry dropped the ball htough if they were smart they would be following the Jap lead and making smaller more efficient cars years ago.
 
Joined
5 August 2004
Posts
1,996
Reactions
0
I simply don't buy into this US sub prime, credit crunch/recession crap!

I find that about every 6 months of so, we get an excuse for why the market needs to correct.

Feb 07 - Chinese Market

July 07 - Sub Prime Credit

Feb 08 - Asteriod Crisis, possibilty of crashing into earth

July 08 - Aliens have landed:eek:

Its just garbge, media hype;)
 

wayneL

Trading the Apocalypse
Joined
9 July 2004
Posts
22,100
Reactions
7,381
I simply don't buy into this US sub prime, credit crunch/recession crap!

I find that about every 6 months of so, we get an excuse for why the market needs to correct.

Feb 07 - Chinese Market

July 07 - Sub Prime Credit

Feb 08 - Asteriod Crisis, possibilty of crashing into earth

July 08 - Aliens have landed:eek:

Its just garbge, media hype;)
So no logical basis for you thoughts then?
 
Joined
5 August 2004
Posts
1,996
Reactions
0
So no logical basis for you thoughts then?

Why do we need logic, when you can almost chart to the month, every 6 months, give or take 1 month, to the next correction.

Just switch to cash or short the market, early next year!

Piece of cake don't you think;)
 

wayneL

Trading the Apocalypse
Joined
9 July 2004
Posts
22,100
Reactions
7,381
Why do we need logic, when you can almost chart to the month, every 6 months, give or take 1 month, to the next correction.

Just switch to cash or short the market, early next year!

Piece of cake don't you think;)
Oh yeah! Dead easy! :rolleyes:
 
Joined
5 August 2004
Posts
1,996
Reactions
0
Oh yeah! Dead easy! :rolleyes:

Why do we need to complicate things, it has be proven time and time again, by many members on this board about the 6 month (+/- 1 month) correction theory.

Countless charts have been posted to prove this theory!
 
Joined
4 July 2006
Posts
145
Reactions
0
My question is this 700mil of credit for housing loans, once all the houses have been sold in default of payment, won,t the losses be minor.Sure the house prices will stall for a while but I,m sure investors will enter the market for cheaper housing for rentals.Bank,s will tighten up there rules a bit but I think they will use Asia a bit more.Expect the fed to cut interest rates and the bull to continue to run.:) I live in hope;)
 

wayneL

Trading the Apocalypse
Joined
9 July 2004
Posts
22,100
Reactions
7,381
Why do we need to complicate things, it has be proven time and time again, by many members on this board about the 6 month (+/- 1 month) correction theory.

Countless charts have been posted to prove this theory!
Look back a bit further than a couple of years. :rolleyes:
 
Joined
5 August 2004
Posts
1,996
Reactions
0
Look back a bit further than a couple of years. :rolleyes:


Why...?

We only need to look back over the last couple to get the real truth. The lies and manipulation of the U.S. market.

Speaks volumes to me.

The next announcement is that rates will be cut in the U.S. and we will get a steady rally for the next 5 months. Then in Jan/Feb/March next year the next pressing issue will be raised, just in time for the next correction.

How ironic:rolleyes:
 

explod

explod
Joined
4 March 2007
Posts
7,291
Reactions
1,052
Why...?

We only need to look back over the last couple to get the real truth. The lies and manipulation of the U.S. market.

Speaks volumes to me.

The next announcement is that rates will be cut in the U.S. and we will get a steady rally for the next 5 months. Then in Jan/Feb/March next year the next pressing issue will be raised, just in time for the next correction.

How ironic:rolleyes:

As a mater of fact, and well discussed on this forum, the US dollar is just a whisker away from an all time low. Any interest rate cut will see that breakdown and there will then be a flight from US dollars into other currencies and prescious metals. The dollar will then be on the way of the worthless deutschmark, of I think 1917.

It will be interesting to see how your prediction plays out
 

wayneL

Trading the Apocalypse
Joined
9 July 2004
Posts
22,100
Reactions
7,381
Why...?

We only need to look back over the last couple to get the real truth. The lies and manipulation of the U.S. market.

Speaks volumes to me.

The next announcement is that rates will be cut in the U.S. and we will get a steady rally for the next 5 months. Then in Jan/Feb/March next year the next pressing issue will be raised, just in time for the next correction.

How ironic:rolleyes:
2 separate points here. The Wall St @ssholes will get their rate cut, and we will rally, but that will start the next macrocycle.

Which is why you need to look back further than 2 years. You are looking for the wrong constants.
 
Joined
23 October 2005
Posts
859
Reactions
0
Any interest rate cut will see that breakdown and there will then be a flight from US dollars into other currencies and prescious metals.
It will be interesting to see how your prediction plays out

Precious metals, you think so?? Those who own Silver don't share your view, it's been tanking it the last 2 weeks, perhaps a precurser to a move in Gold??

As for the Fed giving another rate cut, it will supply only limited fuel for another rally, the Fed was played most of it's cards already from 2000-2003 and has limited space to manoevre. Can they bring back the bubble again?? IMO investors will very cautious this time round.

After the Nikkei started to tank in 1990 the BOJ tried similar tactics effectively taking their rates to almost zero (they may as well have handed out yen), what did that do for the Nikkei??
 
Top