Tag Archives: debt bubble

Six On The Trot

15 Feb

Latest news:

The federal government’s fiscal position continues to deteriorate, with new data showing a $22 billion deficit in the six months to December 2012.

The government originally forecast a $1.077 billion surplus for 2012/13.

Well done Wayne. That’s six on the trot.

Mega deficits, that is.

In other news, the government’s gross debt is now $260 billion … and they’re scheduled to borrow another $2.45 billion next week.

UPDATE:

Click to enlarge

Click to enlarge

A Sign The End Of Our Housing Bubble Is Nigh

15 Feb

First home buyers are waking up. No longer are falling usury rates seen as a sign to “Buy Now!”

Quite the contrary.

They are a sign that says “DON’T BUY NOW!!”

From the Courier-Mail:

LENDERS have started dropping their home loan interest rates without waiting for the Reserve Bank of Australia to move.

Although the RBA last week decided to keep interest rates on hold, a couple of lenders have dropped their variable rates and many more cut their fixed rates.

According to financial comparison website RateCity, BMC Mortgage cut some of its variable home loans this week by up to 10 basis points.

Yesterday Holiday Coast Credit Union cut its variable rate by 20 basis points.

Since Monday, many lenders have cut their fixed rates, with ANZ and Commonwealth banks dropping by up to 30 basis points, Suncorp 20 basis points and RAMS by 40 basis points. St George cut its fixed home loan rates for one, three, four and five-year terms.

The number of home loans approved by banks and other lenders has fallen, according to Australian Bureau of Statistics figures.

Demand for loans from first-home buyers has slumped to its lowest level in more than eight years.

The number of home loans approved in December was down 1.5 per cent on the previous month. This is despite four interest rate cuts by the RBA last year.

According to betting on futures markets, there is an even-money chance the RBA will cut the official cash rate next month to a record low of 2.75 per cent.

Unsurprising. Long expected, and forewarned of right here, and elsewhere.

The financial system – bankstering – is a Ponzi scheme.

It requires ever-expanding growth in “credit” issuance to sustain itself, and to continue generating vast profits for banksters.

As we saw in The Easy Way To Know Where House Prices Will Go, the annual growth rate in credit debt for housing has been in overall decline since Feb-Mar 2004. Housing debt is still growing. But at an ever slower annual rate:

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Feb 2004 – Peak in annual growth rate for Housing Credit

We also saw something more important.

That Australia’s world-leading house price bubble is NOT, as many vested usurers would have you believe, due to “demand” for housing driven by population growth.  That is, by eager Owner-occupiers looking to “own their own home”.

In fact, RBA and ABS data clearly shows that for several decades, by far the greatest driver of Housing Credit growth in Australia – and thus, the greatest driver of house prices – has been so-called “Investors”. Known by the wise as “speculators” –

Click to enlarge

Click to enlarge

For a detailed, easy-to-understand explanation of the true drivers of Australia’s house price bubble, click here.

For those who can’t be bothered, simply take note of the obvious.

Everything in the economy starts with the banking system.

They are not just the pipes and taps for the flow of “money” throughout the economy.

Banks are the creators of “money”.

Don’t believe me? No less an authority than the biggest bankster of all, the Federal Reserve Bank, has said exactly that:

The actual process of money creation takes place primarily in banks. As noted earlier, checkable liabilities of banks are money. These liabilities are customers’ accounts. They increase when customers deposit currency and checks and when the proceeds of loans made by the banks are credited to borrowers’ accounts.

It is really quite simple.

Banksters grow richer by lending. At usury.

When you sign up for a loan, the bank creates new “money”. How? By typing a new, double-entry, digital book-keeping entry into their computer.

A new “deposit” for you. With which to buy “your” house.

A new “asset” for them. Your signature on a loan document, pledging to work as their debt-slave for the next 30 years to repay that loan … plus interest.

Your loan, is their asset. Your legally binding pledge to repay those electronic digits plus interest, is their asset.

Banksters are all about profit.

They will only cut interest rates on home loans – by far their #1 profit centre – out of sheer necessity.

To attract more willing debt slaves to sign up for a home loan.

To keep their Ponzi scheme going.

Now, it may take many months yet, or even years, for Australia’s house price bubble to burst.

Obviously, the banksters will do everything in their power to prevent it.

Their cutting home loan interest rates “out-of-cycle” is one clear sign of that.

Their inevitable calls for RBA and government “intervention” to support the housing market – that is, to help out with encouraging/bribing ever more folks into taking on ever more debt – is another.

But the writing is on the wall for the banksters. And our house price bubble.

And that writing on the wall is exactly in the shape of that Housing Credit annual growth chart you can see above.

To quote Prosper Australia’s David Collyer once again –

DON’T BUY NOW!!

Barnaby: Good On You Wayne, You Are A Genius

5 Aug

Media Release – Senator Barnaby Joyce, 5 August 2011:

Mr Swan is a precise reflection on the Labor Party’s total and utter financial incompetence. Mr Swan has carriage over, and a fascination for, a Climate Change modelling section in Treasury. The reality of course is that it has not a prayer of affecting the climate, but until the wave hit he denied the bleeding obvious about Catastrophic Debt Change.

But the Treasurer has done nothing to prepare Australia for the financial fallout on global sovereign debt, which some of us have been screaming about now for years. Yes, I was talking about this even before my brief tenure in Shadow Finance.

Instead, Swan and Labor have overseen the third largest proportional increase in public sector debt in the world. Ken Rogoff from Harvard will confirm this.[1]  Iceland, Ireland then us; good on you Wayne you are a genius.

Iron ore, coal and wheat saved us from the first GFC not $900 cheques, ceiling insulation and school halls. Heavy floods in Queensland also brought a severe decline in GDP for Australia recently just to remind us of what happens when coal can not get to port.

We have not heard boo on how this nation invests in where we make our money. It was pathetic that even as recent as yesterday they were talking about borrowing another $100 billion to build a not as fast as a plane passenger train.

Now Wayne what will that help us export to pay for your debt?

[1] Reinhart, C. and Rogoff, K. 2011, ‘A Decade of Debt’, Centre for Economic Policy Research Discussion Paper, p. 12, http://www.voxeu.org/sites/default/files/file/DP8310.pdf

Why The US Is Doomed, And The Debt Ceiling “Crisis” Is Irrelevant

1 Aug

One chart from the New York Times explains why it no longer matters what US politicians decide to do about raising their debt ceiling even higher:

Exponential rise = unsustainable bubble.

Whether now, or later, the US economy is doomed.

Fitch Ratings Lists Australia’s 50 Most Delinquent Regions

15 Jun

h/t MacroBusiness.

Does your area feature in the Top 50 list of regions with the highest rates of mortgage payment delinquency (click to enlarge):

Source: Fitch Ratings

Source: Fitch Ratings

Mortgage arrears rising.

House prices falling.

Recently downgraded banking system with $15 Trillion in Off-Balance Sheet “Business” (derivatives) versus only $2.66 Trillion in On-Balance Sheet “Assets” … 66% of which “assets” are actually loans.

Australia “almost certainly” in recession in 2nd half of 2011.  With eastern Australia already “in deep recession” and NSW/VIC manufacturing “stuffed”.

Warnings of a “perfect storm” of fiscal woe “by 2013 at the latest” from the man made famous for predicting the GFC.

Confirmation that the USA is defaulting on its debts (just as Barnaby warned in 2009).

Warnings that our biggest customer China is likely to experience a “hard landing”, with a 60% chance of the trigger being an internal banking crisis.

Warnings that China and our second biggest customer, Japan, are set to slow … or implode.

A blithering idiot RBA Governor who “does not know anyone” who predicted the GFC, but still in charge of setting interest rates. Having learned nothing from his screw up in raising rates into the teeth of the 2008 GFC.  And keen to raise them again.

Our banks being warned for even more reckless lower lending standards, in trying to keep their property bubble-fuelled ponzi scheme from collapsing.

And both major parties planning to steal our super to pay down ever-rising, all-time record public debt.

This is “How Australia Will Look When The SHTF”.

China Lending Tumbles, Signals Slowing Economy

14 Jun

From Bloomberg:

China’s lending tumbled in May and money supply grew at the slowest pace since 2008, adding to signs that the world’s second-biggest economy is cooling.

“This provides another data point highlighting the growth risk,” said Tao Dong, a Hong Kong-based economist for Credit Suisse Group AG. “I think the economy is heading to a soft landing in the second half of 2011, but the risk of a hard landing seems to be on the rise,” Tao said, adding that small companies are short of credit.

A moderating expansion in the Chinese economy is adding to concerns that global growth is faltering.

How’s that promised single year of budget “surplus” in 2013 looking, Wayne?

China’s Economy At Risk Of “Hard Landing”, 60% Chance of Banking Crisis By Mid-2013

12 Jun

Nouriel Roubini, one of the dozen or so economists who predicted the GFC, has just given an ominous warning for all those – like Wayne Swan, the Treasury department, former Treasury secretary (and now personal adviser to Gillard) Ken Henry, and the RBA – who are blindly banking on a never-ending China boom, with continuous record high terms-of-trade, to get us out of their $1.59 million per hour Interest-only debt hole.

From Bloomberg, 11 June 2011:

China’s economy is at risk of a “hard landing” after 2013 as efforts to spur growth through investment cause excess capacity, said Nouriel Roubini, the New York University professor who predicted the financial crisis.

“China is now relying increasingly not just on net exports but on fixed investment” which has climbed to about 50 percent of gross domestic product, Roubini said in Singapore today. “Down the line, you are going to have two problems: a massive non-performing loan problem in the banking system and a massive amount of overcapacity is going to lead to a hard landing.”

The nation faces a 60 percent chance of a banking crisis by mid-2013 in the aftermath of record lending and surging property prices, according to Fitch Ratings. A record $2.7 trillion of loans extended over two years has pushed property prices in China to all-time highs even as authorities set price ceilings, demanded higher deposits and limited second-home purchases.

Anything else?

There is increasing evidence of a potentially “excessive” slowdown in the world economy and crude prices may climb to as much as $150 per barrel if unrest in major oil-producing nations intensifies, Roubini said.

Roubini in July 2006 predicted a “catastrophic” global financial meltdown that central bankers would be unable to prevent. The collapse of Lehman Brothers Holdings Inc. in 2008 sparked turmoil that led to the worst financial crisis since the 1930s.

Oops.

There goes the neighbourhood.

And your super.

Hmmm, what was that warning Barnaby gave us around a year ago? Something about “a bigger GFC”?

Barnaby is right.

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