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12-20-2008, 12:13 PM   #31
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Hey, I have some real estate up there you can invest in...

12-20-2008, 10:52 PM   #32
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QuoteOriginally posted by Peter Zack Quote

The economic boom of the past few years was built on a totally false basis. Homes sold with "no doc" mortages, people with no jobs, Mortgage securities based on junk. The housing undustry was fueled on a lie. It drove everything to record heights until the bill came due. So what's the scheme to create the next boom?
Oh you're preaching to the choir.

The housing industry was always a scam. It was fueled by "creating" demand with low cost loans. When that wasn't enough (see my note on how the average middle class wage in the US HAS NOT increased) they started fudging the #s.

As someone with only 9 credits in economics (but a deep interest), I can't say I fully understand everything but I was wondering over the last few years how if personal savings were at all time lows, food, fuel, medical and inflation were up, and wages were stagnant, how people could afford to buy these houses? Simply they couldn't. It was all smoke and mirrors!! And everyone was winning (government with a bigger tax base, banks with these loans, people living way above their means) so no one ever bothered to look into this.

We didn't buy a house in all this crazyness, and we looked like fools. My theory (backed by some very good economist, and financial planners) is houses don't actually have a return so buying one should be a choice based on something you want, rather than something you feel compelled to "invest" in. That is, after taxes, maintenence, inflation, and other factors, the return on a house after 20 years = 0% nation wide.

Obviously there are places with high natural demand that do better, but even with real demand, you still do better investing $200,000 into the stock market over 20 years (and I mean a lot better).

What hadn't proven true until now is the fact that houses ARE NOT guaranteed to continuously increase in value. It's precisely why I don't approve of bailouts. The reason is, my 401K lost 41% this year, but no one is bailing me out. My personal stock portfolio lost 6% this year, where is my money? People can't start crying that there house is worth less than they paid, because so is my portfolio!!!

I think people in the US might need to start looking at houses not as an investment but as a place to live. BTW, can you tell me if the percentage of wealthy who rent is higher or lower than poor people?....It's about the same. Only the middle class thinks owning a house is a god given right, and also a solid investment! Both of which aren't true, and are a huge part of this mess!
12-20-2008, 11:22 PM   #33
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QuoteOriginally posted by jocko_nc Quote
Consider the irony: Why the hell would they have named that threatened-to-thaw frozen land mass "Greenland"? Duh?
It was green when it was first colonised. Then the ice came and now the ice is disappearing again.
12-20-2008, 11:28 PM   #34
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QuoteOriginally posted by Mountain Vision Quote
Oh you're preaching to the choir.

What hadn't proven true until now is the fact that houses ARE NOT guaranteed to continuously increase in value. It's precisely why I don't approve of bailouts. The reason is, my 401K lost 41% this year, but no one is bailing me out. My personal stock portfolio lost 6% this year, where is my money? People can't start crying that there house is worth less than they paid, because so is my portfolio!!!
and talking of bail outs.....(IF media stories over here are correct) aren't Goldman Sachs & Morgan Stanley a couple of heavenly twins. It has been reported here that GS received a 10 billion bailout and have just paid out 10 billion in bonuses to its staff, as has Morgan Stanley, albeit a lesser amount....only several billion.

I really wonder how the US taxpayer feels about this.

12-21-2008, 08:19 AM   #35
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QuoteOriginally posted by Mallee Boy Quote
and talking of bail outs.....(IF media stories over here are correct) aren't Goldman Sachs & Morgan Stanley a couple of heavenly twins. It has been reported here that GS received a 10 billion bailout and have just paid out 10 billion in bonuses to its staff, as has Morgan Stanley, albeit a lesser amount....only several billion.

I really wonder how the US taxpayer feels about this.
I believe the top execs forwent their bonuses but some in the lower eschelon's did receive them. I don't believe it amounted anywhere near 10 billion though.

The fact is though, some did receive them. It all reinforces one simple fact....if you bail them out, it encourages bad behavior. Let them succeed or fail on their own. If they can afford to pay bonuses (which many managers receive as part of their compensation package and they know that going in), great. If they are on their own, they will be less likely to when times are bad and they will more than likely make the right decision for the company.

It's just like major league baseball. So many folks are complaining how certain players get such large salaries just to play ball. Quite honestly, in some cases, it's because tax payers in the community/state are subsidizing the industry by paying for stadiums, etc. Well, it would be a lot harder to justify $200 million dollars for a pitcher if they had to use those funds for the building where they do most of their business. I say if they were on their own and could still afford to pay that kind of salary, who cares. But when we are subsidizing the problem, it's not capitalism anymore. It's not an equal and free playing field anymore between all businesses. Many businesses are on their own as they should be and are paying their bills and making the hard decisions to stay afloat. But a select few are getting a "bonus" from the government simply because they are big and some feel their demise will cause too much harm. Unfortunately, this is one way that a monopoly is started. Ultimately, it spells doom for many small and medium-sized honest businesses....who, by the way, also have employees who will then be on the street.

That is where we are now in the US...it's really not capitalism (not true American capitalism). Some businesses are "blessed" with government bonuses (pronounced "bailout") and now even have the government as a controlling stock holder (who will soon be determining what kind of cars to build or what kind of products to manufacture), while the rest of us who own and run businesses continue to play under the traditional rules and take the full brunt of the downturn.

This is not capitalism.
12-21-2008, 10:01 AM   #36
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QuoteOriginally posted by Damn Brit Quote
It was green when it was first colonised. Then the ice came and now the ice is disappearing again.
Yup. And somehow we are supposed to keep is from melting again?
12-22-2008, 02:35 PM   #37
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QuoteOriginally posted by Mallee Boy Quote
It is so bloody quiet here in the office and I have had too much time to think......and there are a couple of things about the current "crisis" that are really starting to piss me off.
Another old finance saying that summarizes your thoughts: profits are privatized, losses are socialized.

Those old finance guys knew what they were talking about.

Strap your seat belt in. In this economic cycle, Australia is in for a very rough ride.


QuoteOriginally posted by Mallee Boy Quote
So out comes the batterred old soap box.

......ahhh....that feels much better.

Nothing that a good glass of chardonnay can't help, because there's not much else we individual citizens can do about this mess except try to ride it out.
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