Global financial crisis – the punt, the stunt and the burden!

Global financial crisis – the punt, the stunt and the burden!

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The global financial crisis (GFC) in Australia was short and quick and now Australia has to manage its inherited financial flu, courtesy of inexperienced politicians shooting from the hip (your hip pocket).

With the benefit of hindsight, the global financial crisis (GFC) was not equal (or even close) to the Great Depression (Rudd/Swan analogies via Fort Fumble (Federal government), where, rash/panic policy decisions have sent our national recovery back decades. I stand convinced that businesses have led the road to recovery – not cash splashes. Just one negative quarter of economic growth (March quarter) does not (and should not) equate to over $300 billion of debt.

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Tim Mooney Photography – Palm Beach & Palm Beach Lighthouse

www.timmooneyphotography.com

The Reserve Bank of Australia (RBA) took a totally different read on our economy and massaged the cash rate down, opting for measured reductions over panic policy. RBA – “In contrast to most other developed economies, indicators of household activity in Australia have been fairly resilient over the past year. Retail sales and the housing market have been quite buoyant since late 2008 and there has been a significant rebound in consumer sentiment, particularly over the last few months.” With the recession now abating, the next move with interest rates will be up not down.

Given that the vast majority of businesses received absolutely no financial benefit from Fort Fumble’s financial based recovery plan, the question now is, when will an Australian Federal government next return a budget surplus? In all probability 2020. That means eleven years of lost opportunities to build a better and stronger economy.

A recession (March quarter) is no excuse for the embarrassing rhetoric from elected politicians when in front of a camera. If the majority of those running businesses had listened to Fort Fumble’s predictions of doom and gloom (Great Depression 2) unemployment would have been closer to ten per cent. Fort Fumble panicked but fortunately, business managers relied on their own aptitude, intelligence and readings of their respective business markets. Then again, they are not playing with and wasting other people’s money.

Just as interesting are journalists who don’t ask elected politicians if they still stand by their previous predictions regarding the GFC, which prompted unprecedented national debt levels. Just as interesting again, is that the Westpac-Melbourne Institute consumer sentiment index rose 4.0 per cent in August to 113.4 points which lifts the index to its highest level since October 2007, when it recorded 115.3 points.

Much like the innuendo that half of Mosman’s houses (Mosman has 4,900 houses approximately) were secretly on the market when anecdotal sales evidence could only identify 275 (November 2008) that were actually for sale. Today, when I look at www.domain.com.au Mosman has just 75 houses for sale which leads us to predict that house prices will jump by a ten per cent minimum in the run through to Christmas. Of the 75 houses currently available, 24 have been on the market for less than one month, 10 have been on the market for less than two months and 41 have been on the market for over three months.

The real estate industry is quickly moving into overdrive with the leading online agencies (those who invested in the future with their own money) becoming the preferred option for vendors).

PricewaterhouseCoopers recently released its Entertainment & Media Outlook 2009-2013 report which predicts growth at just 1.7 per cent as against the previous average annual spend of 5.5 per cent. It will be very difficult for traditional media to bounce back when vendors are opting for online campaigns over more expensive print campaigns. Everything points to the internet. This is exactly how agents are increasing their online presence with database client communications. I will make a prediction that over the next 24 months, a quarter of Australian real estate agencies will close down simply because they have fallen by the wayside with technology. This is the stark reality of changing times where nine years on our online media platform convictions/predictions are now a reality.

Electronic listings for ‘homes open for inspection’ are now being fast tracked. Then again, Richardson & Wrench Mosman (RWM) has been doing this for nine years and we were the first real estate agency to release this industry media platform.

My thanks to Steve and Richard for writing the last three editions while I took my mid-year break. Unfortunately, I failed in my efforts to secure that Aussie Bar table mat, because they have now sold out – so I am back at Christmas to secure this valued commodity.

Plenty of clues in the Mosman housing market at this point in time. RWM currently has 25 per cent of the Mosman housing market on our online sales platform which coincides with the fact that RWM has sold the greatest number of homes during the GFC – then again how many weekly market updates are in your inbox?

Cheers ^__^

For this week’s recorded Mosman real estate, Cremorne real estate, Neutral Bay real estate and Cammeray real estate sales www.rwm.com.au/news/

23 Responses to “Global financial crisis – the punt, the stunt and the burden!”

  • Brian says:

    Didn’t I hear Glenn Stevens say this morning at his media conference in answer to a journo’s question that $300m of debt was not significant as a percentage of our GNP and was far lower than most other G8 countries, or did I dream that ?

  • Brian,

    Yes I read that and one must remember that the Federal government is his employer so not a great move to upset and criticise the boss! If as Stevens says that it is not a significant amount then why will it take so long to pay the debt off?

    Governments boast about their economic management when they deliver a surplus and that won’t happen anytime soon.

  • Brian says:

    Robert,

    With respect, this statement is pure nonsense ;

    “one must remember that the Federal government is his employer so not a great move to upset and criticise the boss!”

    If the Governor of the Reserve Bank is not independant and seen to be so, we all might as well pack up and leave the country.

    Try taking off your Liberal Party blinkers !!

  • Brian,

    Last time I looked the RBA Govenor was appointed by the Treasurer and that was Peter Costello. So it would be (in my humble opinion) highly unlikely that the Govenor would be publicly critical of economic policy. Although they did during the course of the last election raise the cash rate which was a first ever.

    Blinkers removed 🙂

  • Brian says:

    Robert,

    As I understood Glenn Stevens’ answer to a reporter’s question on debt this morning, he was stating facts, not giving an opinion.

    I imagine your blinkers are rusted on !

    Have a good weekend

  • The problem is that the people running the country have to be elected, which means they have to be and to remain, popular.

    Making the best decisions for the country under synthetic conditions and 3 year tenures just isn’t a likely outcome of modern political parties.

    Governments by their very nature are flawed decision making bodies. I say forget worrying about them and just forge your own way regardless of economic climate and policy.

  • Ahhh Brian – you have to move with the times. Blogs (modern technology) are an opinion which then generates opinions. I wonder how our learned friend Mr Stevens would describe the global financial crisis as being compared to the Great Depression? Plenty of facts now emanating from Kevin Rudd’s disastrous read on that 🙂

    Thanks – having a great weekend too.

  • Peter Kraus says:

    10% rise of house prices between now and christmas? Please…..

    With interest rates at record lows, and the govt pumping stimulation into the lower end of the housing market (which I am sure you have benefited from, so keep that in mind as you bash the govt) you still have 70% (41 of those 75 houses) properties not moving for over 3 months. So with the higest level of stimulation ever seen in the Australian housing market your growth stats are hardly showing a booming environment

    Where does the 10% come from? The over leveraged consumer who is already drowning in credit card and mortgage debt, who is facing a rise in rates anyway as the govt tightens up monetary policy?

    Didn’t you write another blog a few months back that said “housing prices have bottomed!” and now you are posting a chart with negative performance in it. Guys like you are funny, you keep calling bottom until something does finally turn and then you say “see I told you all along” even though you have done nothing but call bottom the whole way. Classic Real Estate snake oils salesman.

  • Brian says:

    Well said Peter,

    Robert, I imagine that you would serve your clients more effectively and improve your brand image somewhat if you restricted your comments to the Mosman RE market and the selling of houses which you’re obviously very good at and leave the comments on politics and economics to the professionals in those fields.

    It would substantially improve the value of your Newsletter.

    With the greatest of respect of course !

  • Patricia says:

    Brian and Peter,

    With all due ‘respect’, your memories are selective and micro but your respective condemnation of Robert Simeon and VRN is macro.

    In previous editions of VRN, Robert has discussed the inconsistencies and conflicts in price and volume data by the data aggregators (and which is manifest in the charts above). The aggregated data are inherently retrospective while his view of the market, based on exchange (and negotiations) and not settlements, is of-the-moment.

    Hindsight is 20/20 but arrives too late. Robert does a good job of conveying the current state-of-the-market on a weekly basis in an entertaining format. If you can’t see and accept it for what it is, perhaps you should cancel your subscriptions and spare others your childish insults.

  • Peter,

    I think that you are being a tad hard on snake oils salesmen – so I ran the figures by our team and they believe that ten percent is actually conservative – remember I am talking about Mosman (not the entire market) also look again at the June quarter 2009 figures which the ABS recorded a +4.2 per cent increase. Remember in the month of June 2009 we recorded $63,000,000 in property transactions (which are yet to be recorded).

    The Litmus Test is recorded sales data and watch some sales results going through RWM this week 🙂

  • Brian,

    Thanks for the advice however, given that Virtual Realty News is approaching our tenth year (next month) I won’t be changing my writing style anytime soon 🙂

    Last Saturday, The Australian ran the headline “Wealthy homes targeted in tax plan” which many people raised at our open for inspections that day. Then a few hours later Treasurer Wayne Swan issued a Press Release claiming that this type of taxation was not on the Rudd governments agenda – so politics does play a part in real estate (not sure what part you continue to miss).

    With the greatest respect of course!

  • Oh Patricia – we have missed your blog participation here and the ladies in our office say You Rock! I agree anyone can stop receiving Virtual Realty News by executing the unsubscribe format.

    But then again I believe deep down they love it.

    Welcome back and I owe you a bottle of French 🙂

  • Brian says:

    Childish insults ? Bit hysterical and hyperbolic isn’t it Patricia ?

    Me thinks you protesteth too much.

    I read the Newsletter for RE information, not amateur politically biased economic advice.

    And yes, deep deep down I do love it, damn it ! It’s often good for a very good laugh.

  • Patricia says:

    Robert – You give as good as you get!

    I agree, ‘Brian’, ‘Peter’, et al, do love it deep down.

    They lie in wait for VRN to arrive in their IN boxes on Friday mornings. They roll up their smelly shirtsleeves as they get worked-up over your weekly musings, wiping sweat from their brow as they get pumped-up composing rebuttals, hyperventilating as they press the ‘Submit Comment’ button, and then collapsing in a heap (and wracked with tears and convulsions) with the knowledge that their one and only weekly thrill is over…until next Friday.

    A week is a long time between fixes!

  • Robbie Mac says:

    Well children! Aren’t we having fun in the sandpit this week. All very amusing.

    Some observations:
    1. Sentiment changes quickly. Only weeks ago we were still in “recession porn” mode, talking it down, with the federal government leading the way, no doubt to provide some cover for their own agendas.

    2. A recent trip to North America, where the figures ARE really ugly (just imagine if GM alone goes to the wall. Contemplate that single thought for a minute or two….), but the mood is surprisingly upbeat and the governments there seem to be doing their absolute best to talk things UP.

    3. By my maths, the oft quoted $300 billion is merely a projected figure, rather than an actual total. Given the expectation that we will come out of this more lightly than anticipated, I suspect the number will not reach anything near that.

    4. A comment was made about 3 year terms providing an environment for political expediency and short term decision making. Indeed. However, 4 year terms are available in some states. Exhibit A – NSW. And look how well that has worked….

    5. R&WM have been e-marketing for some time. However, the others are catching up, quickly, and are closer than might be inferred from the general tone of the newsletter, so Robert, don’t fly too close to the sun!

    6. Meanwhile, as those we didn’t elect rabble on, small and medium sized business owners continue their day to day operations, irrespective of what is being said, and occasionally in spite of it, and largely invisible. Not big enough to lobby, too small to be “heartland” mortgage belt sufferers to whom the governments wring their hands, life goes on. The quiet achievers…

    7. With the crisis (hopefully) soon to disappear, the Federal government will be required to face the reality of running things in a normal environment. Methinks the Emperor’s new clothes will be exposed for all to see. It will not be pretty.

    8. And who would have thunk it – a real estate agent in Mosman with Liberal party blinkers. What novelty will they think of next.

    Until the next chapter in this exciting story.

    Over and out.

  • Michael says:

    Brian,

    There is politics mate in just about everything you do. I too enjoy reading VRN each week and the blogs. Ten years already.

    Perhaps we should have a bloggers drinks night and some of the closeters out themselves!!!!

  • Patricia says:

    Michael,

    With ‘respect’ to a bloggers’ drinks night, I’ll contribute the bottle of French that Robert owes me!

  • Hey Robbie Mac are you related to Freddie Mac? 🙂 I actually enjoy flying close to the sun although I am not seeing anyone else yet on that horizon. I do welcome the competition though as it can only improve the users experience. Only three more sleeps until we unveil the next chapter.

    Michael – I would have no hesitation is throwing a party at Baronia House and pick up the tab – so we will put this on the white board.

    Patricia you have such a huge following with our subscribers where I am continually (as other staff too) have we met and do I know you? I tell them that you are a magical mystery whom has mastered the artform of word smithery (is there such a word) 🙂 We so much enjoy your contributions and satire please never cease entertaining us – your approval rating is enormous.

    Brian we would not let you go as the debate is healthy and I remain convinced that I will have your vote at the next election – or possibly at my next book launch on Understanding Micro Political Minds the Mosman way!

  • Mark says:

    Robert, please send me an invite to your “outing” ball at Boronia House.

    Do we wear masks! How about October 31.

    Brian is bringing the lollies, Patricia the French, and I have a few ideas as to what to bring.

  • Patricia says:

    Brian,

    I recall your contributions earlier this year regarding ‘drivel’ and ‘dribble’.

    Likewise, I found this gem in your 27 March post to Robert – ‘…restrict your childish comments to the Real Estate market…’.

    Childish comments? Bit hysterical and hyperbolic isn’t it, Brian?

    With the greatest respect, of course!

  • Peter Kraus says:

    Think I’ll take the unsubscribe option. I’m looking for common sense and realistic opinion on the housing market, not an exchange that is bordering on a swingers scene.

    Patricia – slightly bigger things on the agenda than spamming at this site I’m afraid.

    Apologies for the bluntness in earlier posts, but I live in the US and I see the carnage here and somewhat relish it hitting oz soon enough. Interest rates will rise people and the aussie consumer is broke. No one called the sub prime mess here in the US, so I don’t expect you guys to see it coming either (and that includes Mosman and the champagne parties). The US didn’t see it when the UK went first, so why should you. Cheers

  • See you Pete – life can be hard. Your time spent in the US has obviously led to your calm, confident and outgoing personality. Always great to read motivational human beings opinions 🙂 Australia is not is recession and actually we had just one quarter of negative growth maybe that is why they call us the lucky country! I hope all your bad luck turns around very soon.

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